Which of the following is a positive economic statement?
A) No individual should live in poverty.
B) The rate of unemployment of young African-Americans exceeds that of white Americans.
C) Unemployment is a more serious societal problem than inflation.
D) Economic considerations are less relevant than ethical issues in deciding national policy.
Answer: B
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A fundamental aspect of economics is to
A) ensure that every firm makes a profit. B) analyze how choices are made. C) satisfy all our wants. D) make sure that our resources will always be unlimited.
Government can step in to make economic decisions that address problems markets create, but government action is also imperfect and may not reflect majority views. What situation can arise in which it would be very difficult to identify which choice the majority of voters approves?
a. Budget trading b. Vote cycling c. Logrolling d. Pork-barrel spending
According to the long-run Phillips curve, if the Fed increases the growth rate of the money supply, what happens to the inflation rate and the unemployment rate in the long run?
Normative economics is concerned with
A) value judgments. B) opinions. C) cause-effect relationships. D) observations that can be proved. E) both a and b