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Chapter 1: Problem 10

Which of the following is a statement of positive economics? a. An unemployment rate greater than 8 percent is good because prices will fall. b. An unemployment rate of 7 percent is a serious problem. c. If the overall unemployment rate is 7 percent, unemployment rates among AfricanAmericans will average 15 percent. d. Unemployment is a more severe problem than inflation.

Short Answer

Expert verified
Option c: If the overall unemployment rate is 7 percent, unemployment rates among AfricanAmericans will average 15 percent, is the statement representing positive economics.

Step by step solution

01

Option a

An unemployment rate greater than 8 percent is good because prices will fall. This statement is presenting a value judgment on whether an unemployment rate greater than 8 percent is 'good' or not. This is an example of normative economics, not positive economics.
02

Option b

An unemployment rate of 7 percent is a serious problem. This statement is also making a judgment about whether an unemployment rate of 7 percent is a 'serious problem' or not. This is another example of normative economics, not positive economics.
03

Option c

If the overall unemployment rate is 7 percent, unemployment rates among AfricanAmericans will average 15 percent. This statement is simply presenting a fact or observation without expressing any judgment or opinion. This is an example of positive economics.
04

Option d

Unemployment is a more severe problem than inflation. This statement is making a value judgment by comparing unemployment and inflation. This is another example of normative economics, not positive economics. Based on the analysis, we can see that
05

Option c

If the overall unemployment rate is 7 percent, unemployment rates among AfricanAmericans will average 15 percent, is the statement representing positive economics.

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Most popular questions from this chapter

An economist notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. The economist has a. confused association and causation. b. misunderstood the ceteris paribus assumption. c. used normative economics to answer a positive question. d. built an untestable model.

Economics is the study of a. how to make money. b. how to operate a business. c. people making choices because of the problem of scarcity. d. the government decision-making process.

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, ceteris paribus. The phrase ceteris paribus means that a. other relevant factors like consumer incomes must be held constant. b. gasoline prices must first be adjusted for inflation. c. the theory is widely accepted but cannot be accurately tested. d. consumers' need for gasoline remains the same regardless of price.

Computer programs, or software, are an example of a. land. b. labor. c. capital. d. none of the above.

Select the normative statement that completes the following sentence: If the minimum wage is raised rapidly, then a. inflation will increase. b. workers will gain their rightful share of total income. c. profits will fall. d. unemployment will rise.
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