Positive statements are
a. prescriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. claims about how variables in the economy normally behave.
The correct answer and explanation is:
The correct answer is c. claims about how the world is.
Positive statements are objective assertions that describe how things actually are in the world. They focus on factual information and are verifiable through observation, measurement, or evidence. These statements can be tested, proven true or false, and do not involve any value judgments or opinions about what should happen.
For example, a statement like “The unemployment rate in the U.S. is 5%” is a positive statement because it describes a factual condition that can be measured and verified. It is not concerned with whether this unemployment rate is good or bad, just with what the actual rate is at the moment.
Positive statements are commonly used in economics, where analysts make observations about how economic variables interact. For instance, economists might make a positive statement about the relationship between supply and demand, such as “An increase in the price of a good will typically lead to a decrease in the quantity demanded.” This is an objective statement based on empirical data, and it can be tested through experiments or observation in real-world markets.
In contrast, normative statements are those that make claims about what should be, expressing values, opinions, or recommendations. For example, “The government should increase its spending on healthcare” is normative because it expresses a view about what is desirable or preferred, rather than describing the world as it is.
Positive economics, in particular, aims to study and explain economic phenomena without making value judgments. It deals with the “what is” rather than the “what should be.” This distinction is critical for clear economic analysis, as it helps separate facts from subjective opinions or policy preferences.