When we talk about economics, there are two types of statements that we come across – Normative and Positive statements. Positive statements deal with facts and statements that can be tested and verified, whereas Normative statements involve opinion, beliefs, values and subjective judgement. But the question is – which of the following is a Normative Economic Statement? Let’s dive deep into the topic and understand each type of statement.
Positive Economic Statements:
Positive statements are statements that are based on facts and data, and can be proved to be true or false. These statements do not involve opinions or judgement, rather they deal with what is happening in the economy. Positive economic statements have empirical evidence to support them. Such as,
– “The inflation rate in the country has increased by 2% compared to last year.”
– “The government has lowered the interest rates.”
– “The average income of the country has increased by 5%.”
Normative Economic Statements:
Normative statements are statements that involve subjective judgement, opinion, and values. These statements are based on what should be, rather than what is. Normative economic statements are not verifiable, as they are based on beliefs and values. Such as,
– “The government should increase the minimum wage rate to support low-income families.”
– “The rich should pay a higher tax rate.”
– “The government should provide free education to all citizens.”
So, to answer the question – “Which of the following is a Normative Economic Statement?” – we need to identify a statement that involves opinion, belief or subjective judgement. Here are a few examples:
– “The government should mandate paid maternity leave for all women.”
– “The use of fossil fuels for energy should be banned for environmental sustainability.”
– “The government should provide free healthcare for all citizens.”
In conclusion, Positive Economic Statements are based on facts and data whereas Normative Economic Statements are based on personal opinion and values. To identify Normative Statements, one should look for adjectives such as ‘should’, ‘ought’, ‘better’, ‘fair’ etc. or statements implying what ought to be.
