Question

Which of the following is a statement of positive economics?

1) Too much government spending is the biggest problem facing the U.S. economy.
2) Creating jobs is the most serious problem facing the U.S. economy.
3) Raising taxes provides additional revenue that should be used to finance health care.
4) If taxes are over 50 percent of national income, job creation falls.

Answer 1

The statement 4. 'If taxes are over 50 percent of national income, job creation falls' is a positive economic statement because it describes an outcome without expressing a judgment or recommendation. Positive economics deals with objective analysis, and this statement fits that description.

Step-by-step explanation:

The question of which statement represents positive economics among the given choices relates to identifying a statement that describes what is in the economy rather than what ought to be. Positive economics deals with objective and fact-based statements, while normative economics involves subjective and value-based perspectives. The correct option that is a statement of positive economics is: 'If taxes are over 50 percent of national income, job creation falls.'

Government policies, such as taxing and spending, play a significant role in managing the national economy. Taxation has both positive and negative aspects but is essential in providing the government with revenue to finance public services, including health care and infrastructure. However, taxation can also influence economic behavior, such as job creation and economic growth. The mentioned policies, such as those proposed by President Trump in 2017—tax cuts, increased defense and infrastructure spending, and maintaining social programs—tend to lead to an increased federal budget deficit, illustrating the complex balance in fiscal policy.