Multiple Choice
Which type of economic analysis is most closely associated with the statement: 'Broad government intervention works to achieve equal results and to maintain an ordered liberty'?
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0. Basic Principles of Economics
Positive and Normative Analysis
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From a neoclassical viewpoint, government should focus less on:
A
making value judgments about what the economy ought to be
B
examining consumer and producer behavior in markets
C
studying the effects of supply and demand on prices
D
analyzing objective data and economic relationships
Verified step by step guidance1
Understand the neoclassical economic viewpoint, which emphasizes positive analysis—studying 'what is' rather than 'what ought to be.' This means focusing on objective data and economic relationships rather than making subjective value judgments.
Recognize that neoclassical economics primarily analyzes consumer and producer behavior in markets to understand how supply and demand affect prices and resource allocation.
Identify that making value judgments about what the economy ought to be involves normative economics, which is outside the main focus of neoclassical economics.
Compare the options given: examine which activities align with positive analysis (studying behavior, supply and demand, objective data) and which involve normative judgments (deciding what the economy ought to be).
Conclude that from a neoclassical viewpoint, the government should focus less on making value judgments about what the economy ought to be, and more on analyzing objective economic behavior and relationships.
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