Home Economy Which of The Following Is A Normative Statement? (Overview)

Which of The Following Is A Normative Statement? (Overview)

Which of The Following Is A Normative Statement?

What does a normative statement mean?

What are the essential elements you should know!

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our economic knowledge!

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Normative Statement

A normative economic statement is an economic ideology aimed at prescribing economic development.

A normative macroeconomic statement or economic statement is one where there is value judgment.

The person making the statement expresses a judgment as to what should be done in the economy for its best and most optimal functioning. 

Normative economic include prescriptions for:

  • Progress
  • Development
  • Investments
  • Statements
  • Models
  • Scenarios 

Positive Statement

We can contrast “normative economics”, representing a value judgment on what we should do in the economy or where we must go, with positive economics representing economic objectives backed up with facts and data.

When dealing with normative statements, we say things like “where should we be heading” and when we talk about positive economics, we talk about “cause and effect”.

Which of The Following Is A Normative Statement?

Let’s look at some statements that we can consider to be normative economic statements.

A statement is normative when it expresses an opinion, value judgment, or something that cannot be proven.

Which of the following is a normative economic statement?

  • Data shows that more investment is required
  • Industry reports show the banking sector is suffering
  • We ought to do more for the poor

As you have guessed, the third statement is a normative statement whereas the first two statements are positive statements.

A positive statement is when it’s supported by actual numbers, facts, and data.

A normative statement is when the argument is grounded on the person’s opinion or views of what’s best.

Here are some examples of normative statements:

  • The government should increase its investments when we are in a recession
  • We must lower tax rates for low-income individuals
  • We must increase taxes for high-income earners and corporations
  • The must be a greater incentive to help people save for their retirement 
  • There must be more programs to support small and medium-sized businesses 

As you can see, these statements are made based on the views, opinions, and value judgment of the person making the statement.

Takeaways 

Which of The Following Is A Normative Statement?

Let’s look at a summary of our findings.

Which of The Following Is A Normative Statement?

  • A normative statement is one that is grounded or based on the person’s value judgment where you cannot prove that it is correct or incorrect 
  • For example, the government should increase investments in the economy during negative economic business cycles 
  • Another example is that the government should increase federal minimum wages or the government should restrict the money supply to keep inflation in check 
  • In contracts, a positive is a statement that can be shown or proven to be right or wrong and is typically based on hard data and facts 
Behavioral economics 
Disposable income
Microeconomic definition 
Normative statement 
Objective statement
Positive statement
Subjective statement 
Tax cuts 
Welfare economics
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