For each sentence below determine whether or not it is a pos

For each sentence below, determine whether or not it is a positive or normative statement. Briefly explain your answer for each sentence.

a. The official unemployment rate is a better indicator of economic health than GDP growth over the same period.

b. Other things being equal, if the labor-force participation rate increased and more workers entered the economy the amount of goods and services produced by the economy would grow.

c. Raising the Federal Reserve’s target for the federal funds rate in December 2015 has not resulted in a recession.

d. While there would be significant—and often adverse—impacts for many businesses and industries, raising theminimum wage to $15 per hour in the United States is a moral imperative.

Solution

The basic difference between a positive and normative statement is given as under:

A POSITIVE Statement is an objective statement which can be tested, amended or rejected by the help of the available evidence.

A NORMATIVE Statement is a subjective statement and is a statement of opinion rather than a fact. This statement expresses a value judgement whether a situation is subjectively desirable or undesirable. Basically it emphasises on how a situation \"should\" be.

Note that both the statements can be tested with the help of available evidences.

On the basis of the above definitions, the above statements can be determined.

a. The official unemployment rate is a better indicator of economic health than GDP growth over the same period.

Ans: Normative Statement.

Explanation: This statement is a normative statement because it is subjective and emphasises on how the situation should be. Further it can be explained as, the GDP growth over a period is considered to be an indicator of economic health. While the sentence emphasizes that the indicator should be the official unemployment rate.

b. Other things being equal, if the labor-force participation rate increased and more workers entered the economy the amount of goods and services produced by the economy would grow.

Ans: Positive Statement

Explanation: This statement highlights a situation and therefore it can be tested. It does not uphold any opinion. It is situation-based.

c. Raising the Federal Reserve’s target for the federal funds rate in December 2015 has not resulted in a recession.

Ans: Positive Statement

Explanation: This statement highlights the effect of a certain action on a specific thing. Therefore, it cannot be termed as a opinion. It may or may not be a fact.

d. While there would be significant—and often adverse—impacts for many businesses and industries, raising the minimum wage to $15 per hour in the United States is a moral imperative.

Ans: Normative Statement

Explanation: This statement describes the opinion and does not uphold the fact.