What is a normative statement? Give an example
What will be an ideal response?
A normative statement is a statement about what ought to be. It is a value judgment or opinion and so cannot be proven true or false. An example of a normative statement is "Students should attend school year round to receive a better education."
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With flexible exchange rates, perfect asset substitutability, and perfect capital mobility, expansionary monetary policy will cause
A) income to rise, interest rates to fall, and the domestic currency to depreciate. B) income to fall, interest rates to rise, and the domestic currency to appreciate. C) income to rise, interest rates to remain unchanged, and the domestic currency to appreciate. D) income to rise, interest rates to remain unchanged, and the domestic currency to depreciate.
Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and ATC = $40 per tire at the profit-maximizing output level, then in the long run
a. more firms will enter the market b. some firms will exit from the market c. the equilibrium price per tire will rise d. average total costs must fall e. marginal revenue will rise
When the AS curve is vertical, fiscal policy will be
A. Effective against unemployment but not inflation. B. Effective against both inflation and unemployment. C. Effective against inflation but not unemployment. D. Ineffective against both inflation and unemployment.
Figure 13.1 shows a demand and costs of an unregulated monopoly. At the output level of 22,000 units:
A. the firm's marginal revenue is smaller than its marginal cost. B. the firm is earning a zero economic profit. C. the firm is producing more than its profit maximizing level of output. D. All of these are correct.