Question

Classify each of the following statements as positive or normative.

Positive / Normative:
1. Society faces a short-run trade-off between inflation and unemployment.
2. The government should provide basic healthcare to all citizens.
3. Investment increases when interest rates fall.
4. The Federal Reserve should reduce the rate of money growth.
5. A reduction in the rate of money growth will reduce the rate of inflation.

Answer 1

Answer: The correct classification is:

1. Society faces a short-run trade-off between inflation and unemployment. - Positive.

2. The government should provide basic healthcare to all citizens. - Normative.

3. Investment increases when interest rates fall. - Positive.

4. The Federal Reserve should reduce the rate of money growth. - Normative.

5. A reduction in the rate of money growth will reduce the rate of inflation. - Positive.