Normative economics makes recommendations on how to achieve efficient outcomes, often based on underlying value judgments. It differs from positive economics, which focuses on establishing cause-and-effect relationships between economic variables and making "if…then" type statements that can be tested against empirical facts.

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Normative Economics

Question 35

Multiple Choice

Normative economics:

A) is not based on underlying value judgments.
B) makes recommendations to achieve efficient outcomes.
C) establishes cause-and-effect relationships between economic variables.
D) makes "if…then" type statements and checks them against the facts.

Correct Answer: