Question 1

Which of the following is a statement of positive economics?
A)I hope unemployment comes down soon.
B)President X's way of dealing with unemployment is better than President Y's.
C)I think everyone should sacrifice to reduce the deficit.
D)If taxes are reduced, unemployment will drop.

Accepted Answer

Option D is a statement that describes a cause-and-effect relationship between two economic variables (taxes and unemployment) and can be tested and measured objectively. It is a statement of positive economics because it is based on facts rather than value judgments or personal opinions. Options A, B, and C are all statements of normative economics because they express a subjective opinion about what should or should not be done, rather than what is actually happening or likely to happen in the economy.

Question 2

Which of the following is a statement of positive economics?
A)Too much government spending is the biggest problem facing the U.S. economy.
B)Creating jobs is the most serious problem facing the U.S. economy.
C)Raising taxes provides additional revenue that should be used to finance health care.
D)If taxes are over 50 percent of national income, job creation falls.

Accepted Answer

Option A and B are normative statements because they express a value judgment or opinion about what should or should not be done. Option C is also normative because it suggests what ought to be done with additional revenue from taxes. Option D is a positive statement because it makes an empirical claim that can be tested with evidence. It suggests a cause-and-effect relationship between tax rates and job creation, which can be verified or falsified by looking at historical data or conducting experiments.

Question 3

A positive economic statement is:
A)an opinion of an action that should be taken.
B)an action that will have a positive effect on the economy.
C)a statement testable by facts.
D)a claim that the speaker is positive will occur.
E)always a microeconomic position.

Accepted Answer

A positive economic statement is a factual statement that can be tested by facts and is not based on opinions or beliefs. It describes what is and not what ought to be, and is based on data collected from observation, research, and analysis. A positive economic statement is objective, verifiable, and can be tested through empirical evidence. Hence, option C is the correct answer.

Question 4

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?
A)Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
B)It is not possible for an economist to determine causation between variables.
C)The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.
D)The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.

Accepted Answer

Just because there is a correlation between sitting in the back of the classroom and lower grades, it does not necessarily mean that sitting in the back directly causes poorer academic performance. There may be other variables at play, such as a lack of engagement, distractions, or personal factors, that are influencing the relationship. Therefore, further investigation would be required to establish a causal effect.

Question 5

The statement, "Violent crime has decreased in the last five years," is:
A)obviously wrong and, therefore, cannot be a positive statement.
B)normative since it can be answered by simply looking at the facts.
C)positive because it is testable.
D)not very interesting because all normative issues are of little importance.

Accepted Answer

The statement is testable and empirical data can be collected to determine its accuracy, making it a positive statement.

Question 6

Which one of the following is a positive economic statement?
A)An increase in the minimum wage will reduce employment for teenagers.
B)The minimum wage should be increased.
C)Social justice will be served by increasing the minimum wage.
D)Thoughtful people oppose an increase in the minimum wage.

Accepted Answer

Option A is a positive economic statement because it makes a prediction about the employment rate of teenagers in response to an increase in the minimum wage. It is a statement of fact that can be tested through empirical studies. Options B, C, and D are normative statements that express an opinion about what should or should not be done rather than making a factual claim.

Question 7

Which of the following is a statement of positive economics?
A)Government control of rent is a fair way to help poor people afford housing.
B)Government control of rent keeps landlords from charging too much rent.
C)Government control of rent decreases the number of new apartments constructed.
D)Government control of rent is an injustice.

Accepted Answer

The answer of Which of the following is a statement...

Question 8

What type of economic analysis is limited to testable, verifiable statements?
A)Macroeconomics.
B)Entrepreneurial economics.
C)Positive economics.
D)Normative economics.

Accepted Answer

Positive economics is limited to testable, verifiable statements. It involves objective analysis of economic behavior and focuses on facts and data rather than opinions and values.

Question 9

Which of the following is a positive statement?
A)I think we should pass a constitutional amendment to reduce the deficit.
B)President Clinton's way of dealing with the economy is better than President Bush's.
C)I hope interest rates come down soon.
D)If taxes are raised, unemployment will drop.

Accepted Answer

A positive statement is a statement of fact or an objective observation that can be tested or verified. Option D is a positive statement because it presents a cause-and-effect relationship that can be tested. The other options are normative statements because they express opinions, values, or preferences.

Question 10

Which of the following represents a positive statement?
A)A higher income tax rate will reduce the amount of time that people spend working.
B)Teenage unemployment should be reduced.
C)We should raise the standard of living for the elderly.
D)A decrease in tax rates is needed to help the poor.

Accepted Answer

Option A is a positive statement because it makes a factual claim about the likely effects of higher income tax rates on people's behavior. It does not express an opinion or a value judgment. The other options express normative statements, which are based on subjective beliefs about what should or ought to be the case.

Question 11

Which of the following represents positive economics?
A)Policy A is fair.
B)Outcome B is the best objective to achieve.
C)If policy A is followed, then outcome B results.
D)All of these.

Accepted Answer

Positive economics is concerned with statements that can be tested and proven true or false, such as cause and effect relationships. Option C is a statement of cause and effect, making it the only option that represents positive economics. Options A and B express normative economics, which deals with subjective value judgments about how things should be. Option D includes all of the options, but only option C fits the definition of positive economics.

Question 12

Positive economics:
A)will usually tell us which policy is best.
B)reveals "what ought to be" in economic matters.
C)is of little use to policy makers.
D)is the scientific study of "what is" among economic relationships.

Accepted Answer

Positive economics is the scientific study of "what is" amongst economic relationships. It is concerned with describing and explaining economic phenomena without making judgments about what should be done about them. It is useful for developing economic theories and understanding how the economy works, but it does not make normative statements about what policies should be implemented or what outcomes are desirable.

Question 13

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:
A)profits will fall.
B)workers will earn 3\4 of GDP.
C)the rate of inflation increases.
D)all of these.

Accepted Answer

The answer of Select the positive statement that completes the...

Question 14

"An increase in the federal minimum wage will provide a living wage for the working poor" is:
A)a statement of positive economics.
B)a fallacy of composition.
C)a tautology.
D)a statement of normative economics.

Accepted Answer

This statement expresses a value judgment on what the minimum wage "should be" and is therefore a statement of normative economics. It is not a statement of fact, and there may be differing opinions on whether or not an increase in the minimum wage will actually provide a living wage for the working poor.

Question 15

A positive economic statement:
A)contains personal and social value judgments.
B)is always a mathematical expression.
C)should never be used by an economist.
D)is proper provided the advocator is clear the position rests on personal assessment.
E)is an unbiased report of the facts of the economy.

Accepted Answer

A positive economic statement is a factual statement that does not contain any personal or social value judgment. It simply reports the facts of the economy without any bias or subjective interpretation.

Question 16

Positive economics is a(n):
A)reflection of a country's values.
B)judgment of the correctness of an economic outcome.
C)statement of fact.
D)analysis of what ought to be.
E)analysis of all the good market outcomes.

Accepted Answer

Positive economics refers to the analysis of economic facts and the cause-and-effect relationships between them. It is not concerned with making value judgments or prescribing what ought to be done.

Question 17

Which of the following is an example of a positive economic statement?
A)The economy's real output increased at about 3 percent last year and the unemployment rate decreased.
B)A central bank should not print too much money because inflation could result.
C)Congress should stabilize the social security system by raising taxes now.
D)The government farm products surplus should be distributed to the needy.

Accepted Answer

A is a positive economic statement because it presents a factual observation about the economy's real output and unemployment rate, without expressing any value judgments or opinions. B is a normative economic statement because it expresses a belief about what the central bank should or should not do, based on a value judgment about the potential consequences. C is also a normative economic statement because it expresses an opinion about what Congress ought to do to stabilize the social security system, without presenting any objective data about its current state or the likely effects of raising taxes. D is also a normative economic statement because it proposes a course of action that is based on a value judgment about what the government ought to do with the surplus, rather than describing any economic facts or trends.

Question 18

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a (n)____ economic statement, and the labor head's statement is a (n)____ economic statement.
A)normative; normative
B)normative; positive
C)positive; normative
D)positive; positive
E)proper; improper

Accepted Answer

The Secretary of Labor's statement is a positive economic statement as it provides a factual report of the increase in wage rates. The head of a local labor union's statement is a normative economic statement as it provides an opinion on what should have happened (higher wage gains).

Question 19

"As soon as a mayor announced his\her 'get tough on crime' policy on New Year's day, criminals got scared and the crime rate went down." Suppose that the lower crime rate was actually caused by freezing cold temperatures in January ¾ it was just too cold for anybody to be out robbing other people. Which fundamental hazard of the economic way of thinking did the mayor make?
A)believing that what's good for one person is good for the whole group (the fallacy of composition)
B)failing to take into account the benefits of crime (the payoff fallacy)
C)believing that association is the same as causation
D)failing to understand the difference between positive and normative economics.

Accepted Answer

The mayor made the fundamental hazard of believing that association is the same as causation. Just because the "get tough on crime" policy was announced and crime rate went down does not mean that the policy caused the decrease in crime. The real cause may have been the extreme cold weather. It is important to understand the difference between correlation and causation in order to avoid making faulty assumptions and policy decisions.

Question 20

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:
A)statement of positive economics.
B)statement of normative economics.
C)testable value judgment.
D)fallacy of composition.

Accepted Answer

The statement is a positive economic statement that can be tested with empirical evidence. It suggests a cause-and-effect relationship between an increase in the minimum wage and unemployment among teenagers. Positive economic statements are descriptive and objective, and they can be proven or disproven with empirical evidence.

Quiz 1: Introducing the Economic Way of Thinking

Which of the following is a statement of positive economics?

Which of the following is a statement of positive economics?

A positive economic statement is:

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

The statement, "Violent crime has decreased in the last five years," is:

Which one of the following is a positive economic statement?

Which of the following is a statement of positive economics?

What type of economic analysis is limited to testable, verifiable statements?

Which of the following is a positive statement?

Which of the following represents a positive statement?

Which of the following represents positive economics?

Positive economics:

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

"An increase in the federal minimum wage will provide a living wage for the working poor" is:

A positive economic statement:

Positive economics is a(n) :

Which of the following is an example of a positive economic statement?

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a (n) economic statement, and the labor head's statement is a (n) economic statement.

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a: