Which of the following is an example of a normative economic statement?
A) An increase in government expenditure will lead to an increase in well-being.
B) An increase in the money supply will lead to an increase in the inflation rate.
C) An increase in income is accompanied by an increase in savings.
D) An increase in income is accompanied by an increase in consumption.

Question

Quizplus · Accepted Answer

A normative economic statement is an opinion or value judgment about what economic policy or outcome ought to be. Option A is an example of a normative economic statement because it presents a value judgment about the desirability of government expenditure, rather than simply describing a cause-and-effect relationship. Options B, C, and D are all positive economic statements because they describe an actual relationship between variables without making any value judgments or opinions.

Which of the Following Is an Example of a Normative