Question 1

Positive economics deals with

Accepted Answer

Positive economics is concerned with explanations and predictions of how the economy works, rather than making value judgments or prescribing how things ought to be. It is based on data, facts, and empirical evidence, and aims to provide a descriptive analysis of economic phenomena without incorporating personal preferences or opinions about what is desirable or ideal.

Question 2

The price that a firm's only competitor charges would be a

Accepted Answer

The pricing decisions of a firm's competitor would fall under the category of microeconomics, which examines the behavior of individual firms and consumers in specific markets. Finance, macroeconomics, public finance, and normative issues are not directly related to this specific question.

Question 3

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

Accepted Answer

When economists agree about the impacts of legislation, they are discussing positive issues, that is, what will occur if the legislation is implemented. However, if they still disagree about whether the legislation is a good idea, it is because of normative issues. Normative issues are those related to value judgments or opinions about what is desirable or not. Therefore, economists may have different views on whether the benefits of the legislation outweigh the costs or whether the legislation is fair or not.

Question 4

Suppose two economists agree about who would be helped or hurt by certain legislation,but disagree about whether the legislation would be a good idea.These disagreements

Accepted Answer

When economists agree about the factual implications of a policy but differ on whether it is desirable, they are engaging in normative analysis. This is because they are making value judgments that are not based purely on objective analysis but on personal beliefs and values. These types of disagreements are common in economics, and they often reflect broader ideological or philosophical differences rather than just technical disagreements over the facts.

Question 5

If the president of Chile commented that "the crime rate in Chile is currently too high," this would be an example of a normative statement.

Accepted Answer

A normative statement expresses a value judgment or opinion about what ought to be, rather than stating a fact that can be tested or measured.

Question 6

The unemployment rate for the economy as a whole is a(n)

Accepted Answer

The unemployment rate for the entire economy is a macroeconomic statistic as it measures the overall performance of the labor market and economy as a whole.

Question 7

The Congressional Budget Office and the Office of Management and Budget each produce deficit forecasts for a fiscal year.They use models that are mostly similar but have notable differences.As such,the disagreements are likely usually over

Accepted Answer

The differences between deficit forecasts by the Congressional Budget Office and the Office of Management and Budget are likely due to positive issues, such as different assumptions made in their models or different interpretations of economic data. Normative issues refer to opinions on what policies ought to be implemented, while the other answer choices are not directly related to the calculation of deficit forecasts.

Question 8

The price of apples in Denver,Colorado is

Accepted Answer

The price of apples in Denver, Colorado is a specific market price and therefore a microeconomic variable.

Question 9

The distinction between positive and normative economics

Accepted Answer

Positive economics deals with objective analysis and facts, while normative economics involves subjective judgments and opinions, leading to disagreements among economists.

Question 10

"The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What type of statement is this?

Accepted Answer

The statement is simply stating a fact about the increase in the Consumer Price Index, without making a value judgment or expressing a subjective opinion. Therefore, it is a positive statement.

Question 11

Economists disagree about whether increasing the minimum wage is a good idea,because they put different weight on the importance that the negative impacts have relative to the positive impacts.As such,the disagreements are usually over

Accepted Answer

The disagreements over whether increasing the minimum wage is a good idea are normative issues, meaning they involve value judgments about what is desirable or undesirable. Economists have different opinions on the policy based on their own values and beliefs about the relative importance of the positive and negative impacts.

Question 12

Understanding the distinction between positive and normative economic statements is important because it

Accepted Answer

Understanding the distinction between positive and normative economic statements helps to clarify why economists may have different opinions, as positive statements are based on facts and can be tested, while normative statements are based on value judgments.

Question 13

An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of

Accepted Answer

The economist's statement is based on empirical evidence and makes a factual claim about the relationship between inflation and economic growth. This falls under the realm of positive economics, which concerns itself with describing and explaining economic phenomena.

Question 14

Positive economic statements are usually easier to refute with data than normative economic statements are.

Accepted Answer

Positive statements are statements about the world as it is, which means they can be tested and refuted with empirical data. Normative statements, on the other hand, are value judgments about how the world should be, and cannot be proven or disproven with data alone.

Question 15

The inflation rate for the economy as a whole is a

Accepted Answer

The inflation rate for the economy as a whole is a macroeconomic statistic that measures the overall increase in the price level of goods and services in an economy over a period of time. It is not a normative or positive value judgment, microeconomic statistic, or critical assumption.

Question 16

Which of the following is the study of economic policy recommendations?

Accepted Answer

Normative economics is concerned with making recommendations for economic policies based on value judgments and goals, rather than simply describing how the economy works (positive economics). Choice A (positive economics) is focused on describing and analyzing economic behavior and outcomes. Choice B (law and economics) is a subfield of economics that examines the interaction between legal systems and economic behavior. Choice C (microeconomics) is the study of how individuals and firms make decisions in the market, while choice D (development economics) focuses on the economic development of countries and regions.

Question 17

Economists disagree about many things.When those disagreements are about which model best explains the economy,these disagreements are primarily over "positive" statements.

Accepted Answer

Positive statements in economics are based on facts and can be tested and verified, whereas normative statements are based on opinions and cannot be tested or verified. Therefore, disagreements over the best economic model are typically based on positive statements and empirical evidence.

Question 18

Macroeconomic models focus on the behavior of

Accepted Answer

Macroeconomic models focus on the entire economy, rather than individual households or businesses. These models aim to understand the behavior of the economy as a whole, including factors such as inflation, employment, and GDP.

Question 19

Microeconomic models focus on the behavior of

Accepted Answer

The answer of Microeconomic models focus on the behavior of
...

Question 20

Suppose two economists disagree about who would be helped or hurt by certain legislation.These disagreements

Accepted Answer

The answer of Suppose two economists disagree about who would...

Quiz 1: What is Economics?