Which of the following is an example of a normative economic statement?
A) A cut in the tax rate will lead to an increase in consumption.
B) Relaxation of import duties will encourage imports.
C) An increase in subsidies to farmers will boost agricultural production.
D) An increase in social security benefits will increase the welfare of all economic agents.

Question

Quizplus · Accepted Answer

Normative economic statements are subjective and cannot be empirically tested. Option D is a normative statement as it expresses a value judgment about the welfare of economic agents, without providing any empirical evidence. The other options are positive or descriptive statements that can be tested through data analysis.

Which of the Following Is an Example of a Normative