Determine if the following items represent an example of pos

Determine if the following items represent an example of positive economics or normative economics. The richest 1% of Americans should pay more taxes than the rest of the 99%. A decrease in the supply of coconut will increase the price of German chocolate cake, a good which requires coconut shavings as a key ingredient. The higher the minimum wage, the higher the price of goods and services is likely to be. Social welfare spending in Sweden occupies too large a portion of the national budget.

Solution

Ans 1=normative economics

Ans 2=positive economics

Ans 3=positive economics

Ans 4=normative economics

Positive economics is objective and is based on facts, whereas normative economics is subjective and is value based. Positive economic statements do not have to be correct, however, they should be able to be tested .