Question 1

A normative statement i. can be tested as to whether it is true or false.
Ii. is considered negative.
Iii. depends on a person's values.
A)i only
B)iii only
C)i and iii
D)ii and iii
E)i, ii, and iii

Accepted Answer

A normative statement by definition is a statement that expresses a value judgment or opinion and cannot be tested as true or false. Therefore, option (i) is incorrect. Option (ii) is also incorrect as normative statements can be positive or negative. Option (iii) is correct as normative statements depend on a person's values and beliefs.

Question 2

Which of the following is a positive statement?
A)The rich should pay more in taxes.
B)Everyone should have some knowledge of economics.
C)Taxes on gasoline should be lower so that gasoline is more affordable to the poor.
D)If we reduce welfare payments given to the poor, they will find jobs.
E)Social Security must be reformed.

Accepted Answer

Option D is a positive statement as it presents an if-then statement that can be tested through empirical evidence.

Question 3

Normative statements i. describe how the world is.
Ii. describe how the world ought to be.
Iii. depend on people's values and cannot be tested.
A)i only
B)ii only
C)iii only
D)ii and iii
E)i and iii

Accepted Answer

Normative statements describe how the world ought to be and depend on people's values, making them subjective and not testable.

Question 4

The important characteristic of normative statements is that they
A)explain what really exists.
B)are based on somebody's values and cannot be tested.
C)explain what normally happens in the real world.
D)help guide us to what will normally occur if some economic variable changes its value.
E)do not use the ceteris paribus assumption.

Accepted Answer

Normative statements are based on subjective values and cannot be empirically tested. They are opinions or judgments about what ought to be or what is desirable.

Question 5

A positive statement i. makes a statement about how the world operates.
Ii. is a true statement.
Iii. can be tested against the facts.
A)i and ii
B)i and iii
C)ii and iii
D)i, ii and iii
E)i only

Accepted Answer

A positive statement is a statement that describes how the world is, such as "the earth orbits around the sun." Therefore, i is correct. A positive statement must also be true, so ii is correct. Lastly, a positive statement can be tested against the facts, meaning it can be verified as true or false, thus iii is correct. Therefore, the correct choice is B as it correctly identifies the two correct statements (i and iii).

Question 6

Correlation means
A)"after this, therefore because of this."
B)other things remaining the same.
C)a natural experiment has been conducted.
D)the tendency for the values of two variables to move in a predictable and related way.
E)"on the margin."

Accepted Answer

Correlation refers to the tendency for the values of two variables to move in a predictable and related way. It does not imply causation or a natural experiment, and is not related to the concepts of "after this, therefore because of this" or "on the margin." The phrase "other things remaining the same" refers to the concept of ceteris paribus, which can be important in understanding correlations but is not a definition of correlation itself.

Question 7

The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a
A)normative statement.
B)positive statement.
C)macroeconomic statement.
D)rational-decision statement.
E)marginal statement.

Accepted Answer

This statement is a positive statement because it describes a factual relationship between increases in the tax on gasoline and an increase in the price of gasoline. It does not make any value judgments or opinions about whether this relationship is good or bad.

Question 8

Increasing income tax rates will solve the "social security time bomb issue" is an example of
A)business economic policy.
B)a positive economic statement.
C)marginal cost exceeding marginal benefit.
D)answering the "how" question.
E)globalization.

Accepted Answer

This statement is a positive economic statement because it makes a claim about the relationship between increasing income tax rates and addressing the social security time bomb issue without providing any value judgments or opinions.

Question 9

If the marginal benefit of getting a college degree rises, rational people will
A)attend college in greater numbers.
B)drop out of college.
C)not change their behavior.
D)require that college get easier.
E)raise the marginal cost of attending college.

Accepted Answer

When the marginal benefit of getting a college degree rises, rational people would attend college in greater numbers as they would be willing to invest more money and time in obtaining a degree because they expect to gain more benefits from it. This aligns with the economic principle of rational decision-making, where individuals make choices that will maximize their expected utility or satisfaction.

Question 10

Which of the following is a normative statement?
A)Flood victims should pay for their own rebuilding.
B)When the price of kiwi fruit increases, fewer people eat kiwi fruit.
C)An increase in the supply of computers has caused computer prices to fall.
D)Recessions lead to increases in the unemployment rate.
E)Hurricanes strike mainly Florida and North Carolina.

Accepted Answer

This is a normative statement because it expresses a value judgment about what "should" happen, rather than making an objective statement of fact.

Question 11

A statement that "All children should receive free health care" is an example of what kind of statement?
A)a fair statement
B)a natural experiment statement
C)a normative statement
D)a positive statement
E)a statement on the margin

Accepted Answer

This statement is expressing a value judgement about what should be done, rather than making a factual statement about what is currently happening. Therefore, it is a normative statement.

Question 12

Which of the following is a positive statement?
A)An increase in college tuition is not fair to students.
B)A recession leads to higher enrollments at universities.
C)University bookstore prices are too high.
D)Parking tickets on campus impose an excessive fee.
E)The school needs more parking for students.

Accepted Answer

Option B is a positive statement because it makes a neutral observation about the relationship between a recession and university enrollments without expressing an opinion or value judgement. Options A, C, D, and E all express opinions and are therefore normative statements.

Question 13

When economists use the term "correlation," they are referring to
A)cause and effect relationships between variables.
B)how two variables move together in a predictable way.
C)positive economics.
D)normative economics.
E)economic policy.

Accepted Answer

Correlation refers to how two variables move together in a predictable way, but it does not necessarily imply a cause and effect relationship. Positive and normative economics and economic policy are separate concepts.

Question 14

In examining two variables, we find that as one variable changes, the other changes. These variables are said to be
A)independent.
B)correlated.
C)statistics.
D)significantly related.
E)casually related.

Accepted Answer

When two variables change together, they are considered to be correlated. This means that there is a relationship between the two variables, but it does not necessarily imply a causal relationship or a significant relationship. Only the option B accurately describes the relationship between the two variables. The other options are either incorrect or do not provide a complete explanation.

Question 15

The tendency for the values of two variables to move in a predictable and related way is known as
A)a natural experiment.
B)a normative relationship.
C)an economic model.
D)correlation.
E)a policy relationship.

Accepted Answer

The tendency for the values of two variables to move in a predictable and related way is known as correlation.

Question 16

A statement that argues that "if taxes on gasoline increase, gasoline consumption will decrease" is an example of what kind of statement?
A)a marginal statement
B)a macroeconomic statement
C)a normative statement
D)a positive statement
E)a statement that violates rational choice

Accepted Answer

This statement is a positive statement as it makes a factual statement about the relationship between taxes on gasoline and gasoline consumption.

Question 17

Which of the following statements is a positive statement?
A)Our country must increase military spending.
B)There should be a computer in every elementary school classroom.
C)We need to spend less on luxury items for the wealthy, and more on necessities for the less fortunate.
D)Online shopping increased by 50 percent this Christmas season.
E)Too many people are unemployed.

Accepted Answer

Option D is a positive statement because it states a fact without any subjective bias. It simply provides information about the increase in online shopping during the Christmas season. The other options are normative statements because they express an opinion or a value judgment about what should happen or what is desirable.

Question 18

"Lower ticket prices would lead to more people attending ballgames." This statement is a
A)statement assessing the social interest versus the private interest.
B)normative statement.
C)positive statement.
D)macroeconomic statement.
E)statement that confuses marginal cost and sunk cost.

Accepted Answer

The statement is a positive statement because it is a factual statement that can be tested and proven true or false. It is not a normative statement because it does not express an opinion or make a value judgment. It is also not a statement assessing social interest versus private interest because it does not discuss distributional effects or externalities. It is not a macroeconomic statement because it only concerns one specific market. It also does not confuse marginal cost and sunk cost.

Question 19

A normative statement
A)depends on someone's values.
B)cannot use the word "should."
C)says what is currently believed about the way the world operates.
D)must be tested to determine if it is correct.
E)can be tested to determine if it is correct.

Accepted Answer

Normative statements express personal opinions or beliefs about what should or should not happen. These statements are subjective and depend on individual values and moral judgments. Therefore, option A is the correct choice. Option B is incorrect because normative statements often use the word "should" to express their value judgments. Option C is incorrect because normative statements do not describe the way the world operates, but rather propose recommendations or solutions to problems. Option D is incorrect because normative statements cannot be tested to determine if they are factually correct. Option E is incorrect because normative statements cannot be tested for accuracy, but rather reflect subjective beliefs or values.

Question 20

Correlation means
A)holding everything else constant.
B)after this, therefore because of this.
C)the values of two variables move in a predictable and related way.
D)making statements about how the world should be.
E)the same as causation.

Accepted Answer

Correlation indicates a relationship between two variables, where their values move in a predictable and related way. However, this does not necessarily imply causation, and other factors could be influencing the relationship. A does not accurately define correlation, B is a logical fallacy, D is subjective, and E is inaccurate.

Quiz 1: Getting Started

A normative statement i. can be tested as to whether it is true or false. Ii. is considered negative. Iii. depends on a person's values.

Which of the following is a positive statement?

Normative statements i. describe how the world is. Ii. describe how the world ought to be. Iii. depend on people's values and cannot be tested.

The important characteristic of normative statements is that they

A positive statement i. makes a statement about how the world operates. Ii. is a true statement. Iii. can be tested against the facts.

Correlation means

The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a

Increasing income tax rates will solve the "social security time bomb issue" is an example of

If the marginal benefit of getting a college degree rises, rational people will

Which of the following is a normative statement?

A statement that "All children should receive free health care" is an example of what kind of statement?

Which of the following is a positive statement?

When economists use the term "correlation," they are referring to

In examining two variables, we find that as one variable changes, the other changes. These variables are said to be

The tendency for the values of two variables to move in a predictable and related way is known as

A statement that argues that "if taxes on gasoline increase, gasoline consumption will decrease" is an example of what kind of statement?

Which of the following statements is a positive statement?

"Lower ticket prices would lead to more people attending ballgames." This statement is a

A normative statement

Correlation means