Examine the following statements and determine if they are normative or positive in nature. Explain your answer
a. The U.S. automotive industry registered its highest growth rate in 5 years in 2012; U.S. auto sales increased by 13% compared to 2011 .
b. The U.S. government should increase carbon taxes to control emissions that cause global warming.
a. This is an objective statement about the rate of growth in the U.S. automotive industry. Positive economics is analysis that generates objective descriptions or predictions about the world that can be verified with data. Since data can be used here to verify the rate of growth and whether it is the highest in five years, this is a positive statement.
b. The statement that the government should increase carbon taxes to control emissions is normative since it states what the government ought to do. Normative economics advises individuals and society on their decisions and is almost always dependent on subjective judgments.
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a. Real risk-free interest rate b. Required reserve ratio c. Quantity of real credit per time period d. Quantity of currency per time period e. All of the above are exogenous.
For a given level of inflation, if there is a greater reluctance by foreigners to purchase domestic goods, then the ________ shifts ________.
A. aggregate demand curve; left B. short-run aggregate supply line; upward C. short-run aggregate supply line; downward D. aggregate demand curve; right
Which of the following pairs of goods is most likely to have a positive cross-elasticity of demand?
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The income approach to measuring GDP
A. adds the income received by all factors of production. B. excludes profits since profits are a cost of production. C. adds the dollar value of final goods and services. D. excludes durable consumer goods since they last more than a year.