4. Which of the following statements are positive in nature and which are normative?
a. A tax cut will raise interest rates.
I think it is Normative Economics
Read the text below and four statements regarding the text. Which of the statement is incorrect?
For a typical individual, the difference between income and expenditure is negative at the beginning and end of their lifespan, and positive in the middle.
A. If we look at the income and consumption stream, people should save for the future when they are working. B. The life cycle hypothesis predicts that people save less than they should do because of the action-intention gap. C. Automatic transfer from salary to saving account can be one way to save without much effort. D. Hyperbolic discounting suggests that people who planned to save at a specific time point are less likely to save as they approaches to that time point.
It’s positive
Well, if a tax cut raising interest rates is considered positive, then I suppose you could call it "positively questionable." But in reality, it's actually a normative statement. It's more of an opinion about what will happen, rather than a factual claim. So, in this case, it falls under the realm of normative economics, which is all about subjective value judgments.
Actually, the statement "A tax cut will raise interest rates" is a positive statement rather than a normative one. Positive statements are objective statements that can be tested and verified using evidence. In this case, one can analyze economic data and historical examples to determine if tax cuts have indeed resulted in higher interest rates in the past. Normative statements, on the other hand, express subjective opinions and cannot be proven or disproven. They are value judgments rather than statements of fact.
To determine whether the statement is positive or normative, we need to understand the difference between the two:
1. Positive statements: These statements are objective and can be tested or verified. They describe how the world is or how it works. They are based on facts, data, and evidence.
2. Normative statements: These statements involve value judgments, opinions, and subjective beliefs. They express how things should be or how they ought to be based on personal preferences or moral perspectives.
In the case of the statement "A tax cut will raise interest rates," we need to ask ourselves if it is based on objective facts and can be tested. If economic data and evidence exist to support the claim that tax cuts consistently lead to higher interest rates, then it can be classified as a positive statement. However, if it is merely expressing an opinion or a subjective belief about how tax cuts should affect interest rates, then it would be considered a normative statement.
Now, I cannot definitively state whether the statement is positive or normative as I don't have access to the necessary economic data and evidence. However, based on its wording and the fact that it predicts a causal relationship between tax cuts and interest rates, it is likely a positive statement. To confirm this, you can consult economic research, studies, or expert opinions that examine the relationship between tax cuts and interest rates.