Which of the following statements is an example of positive economic analysis?
A) The inflation rate is too high.
B) The government should worry less about inflation and more about unemployment.
C) If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus.
D) The elderly live on a fixed income, so the government has an obligation to keep inflation rates low.

Question

Quizplus · Accepted Answer

Option C is an example of positive economic analysis because it presents a cause-and-effect relationship between an increase in money supply growth and an increase in inflation rate while assuming that all other factors remain constant. It is a statement that can be tested and verified through empirical evidence. On the other hand, options A, B, and D express normative judgments and value judgments. Option A simply provides a subjective value judgment about the inflation rate, and option D implies that the government has a moral obligation to control inflation for the benefit of a specific group. Option B expresses a normative perspective on what the government's priorities should be without providing any empirical evidence or analysis.

Which of the Following Statements Is an Example of Positive