Which of the following is an example of normative economics?
A) The city of Portland has one of the highest rates of homelessness in the nation.
B) The inflation rate is too high, and the central bank must take measures to lower it.
C) The consumer price index is higher this year than it was last year.
D) A higher gasoline tax will likely reduce gasoline consumption and improve air quality in our cities.

Question

Quizplus · Accepted Answer

Normative economics involves value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal. Choice B, suggesting that the central bank must take measures to lower the inflation rate, is an example of a normative statement because it reflects an opinion on what should be done.

Which of the Following Is an Example of Normative Economics