Positive Vs. Normative Economic Analysis
What will be an ideal response?
Positive statement:
-Descriptive
?-Testable
-What "is" type statement
Normative statement:
-Statement of opinion
-Cannot be tested as to whether it is true or false
??-What "ought to be" or "should be"
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
Private parties may choose not to solve an externality problem if the transaction costs are large enough
a. True b. False Indicate whether the statement is true or false
Assume a perfectly competitive economy would use an assortment of nails that weighs a total of 100 tons. However, the economy is controlled by the government and it sets a ton limit of 100 tons. When production is complete there is only one nail that weighs 100 tons. Which of the following describes what was wrong when government did the planning?
A. Producers did not follow their personal interest in planning production. B. The government miscalculated the correct tonnage that the economy needed. C. The wishes of consumers were not represented in the producer's actions. D. All of these are true.
The circular flow of economic activity is a model of the:
A. flow of goods, resources, payments, and expenditures between the sectors of the economy. B. influence of government on business behavior. C. influence of business on consumers. D. role of unions and government in the economy.