Which of the following is an example of a normative statement?
A) Since this good is bad for you, you should not consume it.
B) This good has bad health effects.
C) If you consume this good, you will get sick.
D) People usually get sick after consuming this good.
A
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According to the Taylor, if there is a recessionary gap of 3 percent of potential output and inflation is 4 percent, what real interest rate will the Fed set?
A. 0.02 B. 0.03 C. 0.015 D. 0.025
Crowding-out is eliminated when the LM curve is ________, so that expansionary fiscal policy ________ the interest rate
A) vertical, does not affect B) vertical, raises C) horizontal, does not affect D) horizontal, raises
Adhering to a strict fixed exchange rate system means that
a. no country will experience inflation or recession. b. each nation improves control over its money supply. c. each nation loses some control of its monetary policy and its domestic economy. d. each nation improves control over its fiscal policy and aggregate demand.
There are 3,000 families in a small town that are affected by air pollution from a local factory. The air pollution could be reduced if the company spent $10,000 on upgraded ventilators. The company agrees to install the ventilators if the affected families contribute the $10,000. However, because individuals will benefit from the reduction in air pollution whether they contribute or not, most people will not contribute and the firm will not install the ventilators. This outcome is an example of the
A. drop-in-the-bucket problem. B. collective action problem (that arises when there are too many parties involved). C. Coase theorem. D. free-rider problem.