Unit 1 Micro: Positive and Normative Statements
This is an introductory blog note for new students of AS microeconomics. It focuses on positive and normative economics.
Positive Statements
A positive statement is a statement about what is and contains no indication of approval or disapproval. A positive statement can be wrong; it can be tested by objective use of evidence. The tools of positive economics are reason, logic and empiricism.
Normative Statements
A normative statement expresses a value judgment about whether a situation is desirable or undesirable. "The British economy would be a lot stronger if Geoff Riley was Governor of the Bank of England" is a normative statement because it expresses a judgment about what ought to be. Statements that include indicator words such as: should, ought, or prefer are likely to be normative rather than positive
Decide whether the following statements are positive or normative:
|
|
Statement |
Positive or Normative? |
|
1 |
The government can reduce obesity by offering a
subsidy to low income families when they buy fresh vegetables in the
supermarket |
|
|
2 |
Luxuries should be taxed more heavily than
necessities |
|
|
3 |
A rise in the value of the exchange rate will reduce
the number of overseas tourists visiting London |
|
|
4 |
The Minimum Wage needs to be replaced with a Living
Wage of £8 per hour |
|
|
5 |
German taxpayers should not have to pay for bail
outs to a failing Greek economy |
|
|
6 |
Drought in the United States should lead to a rise
in the world price of grain |
|
|
7 |
Reducing the top rate of income tax to 45% will
increase relative poverty in Britain |
|
|
8 |
It is right that the European Union has introduced a
system of carbon trading as a way of cutting CO2 emissions |
|
|
9 |
A reduction in the standard rate of VAT ought to
bring about a recovery in consumer spending on many goods and services |
|
|
10 |
A rise in the price of petrol will lead to an
increase in the demand for rail transport |
|
|
11 |
An increase in the rate of inflation will lead
inevitably to an increase in unemployment |
|
|
12 |
Unemployment is more harmful than inflation |
|
|
13 |
The Government might target unemployment rather than
inflation in order to achieve an improvement in economic growth |
|
|
14 |
As a general rule, people are happier in more equal
societies |
|
|
15 |
Despite a large increase in income per head, people
are no happier today than they were 50 years ago |
|
|
16 |
The promotion of happiness is a more important goal
than the maximisation of production |
|
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