Which of the following statements is normative ?
Correct answer: C. The unemployment rate should be lower
- A. Large government deficits cause an economy to grow more slowly
- B. People work harder if the wage is higher
- C. The unemployment rate should be lower
- D. Printing too much money causes inflation
Explanation
The word “should” makes the statement a value-based recommendation rather than a testable description. The other statements are positive claims that can be examined using evidence.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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