Question 1

Which of the following two statements is a positive statement? Which is a normative statement?
I. The federal minimum wage in 2014 was $7.25 an hour.
II. The minimum wage should be high enough that families will not live in poverty.
A)I is positive; II is normative.
B)I is positive; II is positive.
C)I is normative; II is positive.
D)I is normative; II is normative.

Accepted Answer

Statement I is a positive statement as it provides a factual statement about the federal minimum wage in 2014. Statement II is a normative statement as it presents an opinion about how the minimum wage should be set. Normative statements express opinions and cannot be proven true or false. Positive statements, on the other hand, are factual and can be empirically tested.

Question 2

Statements that make value judgments are:
A)pecuniary.
B)positive.
C)nominal.
D)normative.

Accepted Answer

Value judgments are subjective opinions based on personal beliefs or values, and therefore are normative statements rather than objective or factual statements (pecuniary or nominal) or purely positive statements (which do not express a judgment or opinion).

Question 3

Which of the following is sold in the product market?
A)footballs
B)labor
C)physical capital
D)human capital

Accepted Answer

Footballs are a physical good or product that is sold in the product market. Labor, physical capital, and human capital are factors of production that are used to produce goods and services and are sold in the factor market.

Question 4

Which of the following is a positive economic statement?
A)Government has grown too large and should be reduced.
B)There has been an increase in the rate of inflation.
C)Government should be subject to the same rules as all other institutions.
D)Women should be paid as much as men for the same work.

Accepted Answer

A positive economic statement is one that can be tested and validated; it describes what is, rather than what ought to be. Statement B is a factual claim that can be measured and verified.

Question 5

In the circular-flow diagram firms receive money for _____ in the _____ market.
A)selling goods and services; product
B)selling resources; product
C)selling resources; factor
D)selling goods and services; factor

Accepted Answer

Firms receive money for selling goods and services, which are produced in the product market.

Question 6

Which of the following is sold in the product market?
A)land
B)labor
C)cell phones
D)human capital

Accepted Answer

Cell phones are a consumer good that is sold in the product market. Land, labor, and human capital are factors of production that are sold in the factor market.

Question 7

"Unemployment of 5% is too high" is:
A)a normative statement.
B)a positive statement.
C)the circular-flow model.
D)an example of comparative advantage.

Accepted Answer

The statement "Unemployment of 5% is too high" expresses an opinion or value judgement, which is a normative statement. There is no objective measure that determines what level of unemployment is "too high," making this statement subjective.

Question 8

Which of the following is an example of a positive statement?
A)The poverty rate should be 4%.
B)A high rate of economic growth should be a more important goal for the country than a low rate of unemployment.
C)The federal government pays for 46% of U.S. health care costs.
D)Everyone in the country should be covered by national health insurance.

Accepted Answer

A positive statement is a statement that can be verified or tested through objective evidence or facts. Option C is an example of a positive statement because it provides a factual statement about the current state of the U.S. health care system. The other options are normative statements, which express an opinion or a value judgment and cannot be proven or refuted by objective evidence.

Question 9

Which of the following is a normative statement?
A)International trade leads to expanded consumption opportunities.
B)Higher expenditures on health care will reduce infant mortality rates.
C)To improve our economic security, we should reduce our dependence on oil imports.
D)Increased defense spending will lead to higher budget deficits.

Accepted Answer

This statement is normative because it is expressing a value judgment about what we should do in order to improve economic security. The other statements are descriptive, making claims about what will happen as a result of certain actions, without expressing a particular normative stance.

Question 10

In the circular-flow diagram firms buy _____ in the _____ market.
A)goods and services; product
B)goods and services; factor
C)resources; product
D)resources; factor

Accepted Answer

In the circular-flow diagram, firms buy resources (such as labor, land, and capital) in the factor market to produce goods and services.

Question 11

Which of the following is a normative statement?
A)Women's labor force participation rate has increased during the past 100 years.
B)The federal minimum wage is higher today than it was in 1990.
C)Children in the United States are required to go to school until they reach a certain age.
D)The best way to encourage growth in the economy is through government spending.

Accepted Answer

Normative statements express an opinion or value judgment and suggest what should be done. "The best way to encourage growth in the economy is through government spending" is a normative statement because it suggests a course of action and expresses an opinion. The other options are positive statements that describe facts or events without expressing an opinion or value judgment.

Question 12

Which of the following is a positive statement?
A)The poverty rate is 14%.
B)A high rate of inflation is the most important economic goal for the country.
C)Everyone in the country should save money for retirement.
D)Basketball players should not be paid higher salaries than teachers.

Accepted Answer

A is a positive statement because it provides a factual statement about the poverty rate. B is a normative statement because it expresses an opinion on what economic goal is most important. C is also a normative statement because it expresses an opinion on what people should do. D is a normative statement because it expresses an opinion on what basketball players should be paid relative to teachers.

Question 13

Which of the following is a positive statement?
A)The rate of unemployment should be 4%.
B)A high rate of economic growth should be a more important economic goal than a low rate of inflation.
C)The federal government spends half of its budget on national defense.
D)Everyone in the country should be covered by national health insurance.

Accepted Answer

Option C is a positive statement because it presents a fact without expressing any value judgments or opinions. It simply states the percentage of the federal budget being spent on national defense. The other options (A, B, D) are normative statements as they express opinions and value judgments.

Question 14

Which of the following is a normative statement?
A)Government has grown too large and should be reduced.
B)The rate of inflation has increased.
C)Government is subject to the same rules as all other institutions.
D)The money supply grew by 3% last year.

Accepted Answer

A normative statement expresses an opinion or value judgment and suggests what ought to be done. Option A expresses a normative statement by stating that the government should be reduced in size, reflecting an opinion on the role of government. The other options are descriptive statements that report facts or data.

Question 15

In the circular-flow diagram households buy _____ in the _____ market.
A)goods and services; product
B)goods and services; factor
C)resources; factor
D)resources; product

Accepted Answer

In the circular-flow diagram, households act as consumers and buy goods and services in the product market from businesses. Therefore, option A is the correct choice as it represents households buying goods and services in the product market.

Question 16

In the circular-flow diagram households receive money for _____ in the _____ market.
A)producing and selling goods and services; product
B)selling resources; product
C)selling resources; factor
D)selling goods and services; factor

Accepted Answer

In the circular-flow diagram, households provide resources (such as labor, land, and capital) to firms in the factor market, and in return receive payments for these resources. Therefore, households receive money for selling resources in the factor market.

Question 17

Which of the following is a normative statement?
A)The rate of unemployment is 9%.
B)A high rate of economic growth creates jobs.
C)The federal government spends half of its budget on national defense.
D)Everyone in the United States deserves to be covered by national health insurance.

Accepted Answer

Normative statements express a value judgment or opinion and cannot be tested through observation or data. Option D expresses a normative statement by stating what everyone in the US "deserves." The other options are positive statements because they describe facts or relationships that can be tested or verified through observations or data.

Question 18

Which of the following is a positive statement?
A)The rate of unemployment is 4%.
B)A high rate of economic growth is the most important economic goal for the country.
C)Everyone in the country should be covered by national health insurance.
D)Baseball players should not be paid higher salaries than the president of the United States.

Accepted Answer

A is a positive statement because it is a factual statement about the current rate of unemployment, without expressing any value judgment or opinion. B, C, and D are normative statements, expressing opinions or values about what should be, rather than describing what is.

Question 19

Which of the following is a normative statement?
A)The minimum wage has not kept pace with inflation.
B)The minimum wage is an important tool in fighting poverty and should be increased.
C)The minimum wage can cause higher unemployment for teens and unskilled workers.
D)A higher minimum wage is expected to increase the price of a fast-food cheeseburger.

Accepted Answer

Option B expresses a value judgment and suggests what ought to be done, making it a normative statement. The other options, A, C and D, are descriptive statements that describe the current state of affairs, the potential effects or the consequences of a policy, respectively, and are therefore positive statements.

Question 20

Which of the following is a normative statement?
A)The rate of unemployment is 9%.
B)The price of gasoline should be less than $4 per gallon.
C)The federal government spends half of its budget on national defense.
D)Millions of Americans lack health insurance.

Accepted Answer

Option B is a normative statement because it expresses a value judgment about what the price of gasoline ought to be. In contrast, options A, C, and D are all positive statements that describe factual information without expressing any judgment about whether the information is good or bad.

Quiz 2: Economic Models

Which of the following two statements is a positive statement? Which is a normative statement? I. The federal minimum wage in 2014 was $7.25 an hour. II. The minimum wage should be high enough that families will not live in poverty.

Statements that make value judgments are:

Which of the following is sold in the product market?

Which of the following is a positive economic statement?

In the circular-flow diagram firms receive money for _ in the _ market.

Which of the following is sold in the product market?

"Unemployment of 5% is too high" is:

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

Which of the following is a normative statement?

In the circular-flow diagram firms buy _ in the _ market.

Which of the following is a normative statement?

Which of the following is a positive statement?

Which of the following is a positive statement?

Which of the following is a normative statement?

In the circular-flow diagram households buy _ in the _ market.

In the circular-flow diagram households receive money for _ in the _ market.

Which of the following is a normative statement?

Which of the following is a positive statement?

Which of the following is a normative statement?

Which of the following is a normative statement?