Which of the following statements about positive analysis is correct?
A)Positive analysis prescribes the best solution to an economic problem.
B)Positive analysis predicts how an economic system will change over time.
C)While normative analysis can be wrong, since it is often based on someone's opinion, positive analysis is always accurate.
D)Since positive analysis is based on a model, and not the real world, it is mostly irrelevant.

Question

Quizplus · Accepted Answer

Positive analysis aims to understand how an economic system works and how it will change. It focuses on describing what happens and predicting outcomes based on observable data, rather than prescribing what ought to happen. Therefore, option B is the correct statement. Option A is incorrect since positive analysis does not prescribe solutions. Option C is incorrect because positive analysis can also be inaccurate if the data or assumptions used are incorrect. Option D is incorrect since positive analysis is based on real-world data, and models are constructed based on observed behavior in the real world. Positive analysis is concerned with describing and predicting economic behavior and outcomes based on empirical evidence and data. Therefore, option B that states that positive analysis predicts how an economic system will change over time is correct. Option A is incorrect because positive analysis does not recommend any solution or policy to an economic problem, it only describes the situation. Option C is also incorrect because positive analysis cannot always be accurate as it is dependent on the accuracy of the data and assumptions made in the model. Option D is incorrect because positive analysis is based on real-world data and evidence, which is used to develop economic models.

Which of the Following Statements About Positive Analysis Is Correct