Econ Module 1 Quiz 5

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Which of the following represents a positive statement? a. A higher income tax rate will reduce the amount of time that people spend working. b. Teenage unemployment should be reduced. c. We should raise the standard of living for the elderly. d. A decrease in tax rates is needed to help the poor.

a. A higher income tax rate will reduce the amount of time that people spend working.

The difference between a positive economic statement and a normative statement is that a. a positive statement must be true; a normative statement is often not true b. a normative statement must be true; a positive statement is often not true c. a positive statement can be verified; a normative statement cannot d. a normative statements can be verified; a positive statement cannot

a. a positive statement must be true; a normative statement is often not true

Which of the following most clearly distinguishes between positive and normative economics? a. Positive economics is the study of what ought to be; normative economics is concerned with the facts. b. Positive economics is the study of the facts; normative economics is concerned with what ought to be. c. Positive economics is the study of supply and demand in narrowly defined markets such as the market for shoes; normative economics focuses on highly aggregated markets such as the market for all consumer products. d. Positive economics is the study of goods that are scarce; normative economics is concerned with goods that are not scarce.

b. Positive economics is the study of the facts; normative economics is concerned with what ought to be.

Which of the following is a statement of positive economics? a. Government control of rent is a fair way to help poor people afford housing. b. Government control of rent keeps landlords from charging too much rent. c. Government control of rent decreases the number of new apartments constructed. d. Government control of rent is an injustice.

c. Government control of rent decreases the number of new apartments constructed.

Which of the following is a normative statement? a. A decrease in price leads to an increase in quantity consumed. b. Incomes grow more rapidly in high-tax states than low-tax states. c. People would be better off if government expenditures were higher. d. People will buy less butter at $1.50 per pound than they will at $1 per pound.

c. People would be better off if government expenditures were higher.

The statement, "Violent crime has decreased in the last five years," a. is obviously wrong and, therefore, cannot be a positive statement. b. is normative since it can be answered by simply looking at the facts. c. is positive because it is testable. d. is not very interesting because all normative issues are of little importance.

c. is positive because it is testable.

The difference between positive economic statements and normative economic statements is that a. positive statements are based on opinion while normative statements are based on fact b. positive statements are true and normative statements are often false c. positive statements are based on fact while normative statements are based on opinion d. positive statements are often false and normative statements are true

c. positive statements are based on fact while normative statements are based on opinion

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a (n) ______ economic statement, and the labor head's statement is a (n)______ economic statement. a. normative; normative b. normative; positive c. positive; normative d. positive; positive

c. positive; normative

Which of the following is a statement of positive economics? a. Too much government spending is the biggest problem facing the U.S. economy. b. Creating jobs is the most serious problem facing the U.S. economy. c. Raising taxes provides additional revenue that should be used to finance health care. d. If taxes are over 50 percent of national income, job creation falls.

d. If taxes are over 50 percent of national income, job creation falls.

Which of the following is an example of a normative economic statement? a. The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices. b. The economy grew at an annual rate of 5 percent during the first quarter of this year. c. If two automobile companies merge, it is likely that the price of automobiles will rise. d. The minimum wage should be increased so that low income workers can afford to keep up with the cost of living.

d. The minimum wage should be increased so that low income workers can afford to keep up with the cost of living.


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