Questions and Answers
What is a positive statement?
A fall in incomes will lead to a rise in demand for own-label supermarket foods.
True
The rising price of crude oil on world markets will lead to an increase in cycling to work.
True
A rise in average temperatures will increase the demand for sunscreen products.
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What defines a normative statement?
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Pollution is the most serious economic problem.
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Unemployment is more harmful than inflation.
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The government should support the market.
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The government should target poverty by switching to means-tested benefits.
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A rise in the price of petrol will lead to an increase in the demand for public transport.
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A rise in the HKD exchange should lead to a decrease in the rate of inflation.
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The National Minimum Wage should be raised to $6 per hour for all workers.
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The government should abolish inheritance tax.
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The European Single Currency ought to lead to a reduction in price differentials between the European states.
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The government should extend the principle that patients should pay for many of the health treatments they receive under the National Health Service.
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On average, women earn less than men.
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Women should earn as much as men.
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Increasing the minimum wage would be detrimental to the economy.
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Study Notes
Positive Statements
- Positive statements are objective, testable assertions based on available evidence.
- They aim to explain economic phenomena and can be validated or disproven through experimentation and data.
- Examples of positive statements include:
- A fall in incomes leads to increased demand for own-label supermarket foods.
- Rising crude oil prices cause more people to cycle to work.
- Higher average temperatures boost demand for sunscreen products.
- A rise in petrol prices results in increased demand for public transport.
- A stronger HKD exchange rate correlates with lower inflation rates.
- On average, women earn less than men.
Normative Statements
- Normative statements are subjective and arise from personal opinions or value judgments; they cannot be tested.
- They typically involve opinions about what should happen, reflecting beliefs rather than objective facts.
- Examples of normative statements include:
- Pollution is the most serious economic problem.
- Unemployment is considered more harmful than inflation.
- The government should intervene in markets to provide support.
- The focus should shift to means-tested benefits to alleviate poverty.
- The National Minimum Wage should increase to $6 per hour.
- The government should abolish inheritance tax.
- The European Single Currency ought to reduce price differentials among European states.
- Patients should bear more costs for treatments under the National Health Service.
- Women should earn equal pay to men.
- Increasing the minimum wage is seen as harmful to the economy.
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