Which one of the following is a correct statement about positive and normative analysis, all else held constant?

• A. Normative analysis focuses exclusively on describing what is, without making any value judgments.
• B. Positive analysis is concerned with what ought to be rather than what actually is.
• C. Positive analysis deals with objective statements that can be tested or verified.
• D. Normative analysis provides statements that are always scientifically testable.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the difference between positive and normative analysis in economics. Positive analysis deals with objective, fact-based statements that can be tested or verified, while normative analysis involves subjective value judgments about what ought to be.
2. Step 2: Identify that positive statements describe 'what is' and can be proven true or false through evidence or data, without involving opinions or beliefs.
3. Step 3: Recognize that normative statements express opinions or prescriptions about 'what ought to be' and cannot be tested or validated scientifically because they depend on personal values.
4. Step 4: Evaluate each given statement by checking if it correctly describes either positive or normative analysis based on the definitions: positive analysis is testable and objective, normative analysis is subjective and value-based.
5. Step 5: Conclude that the correct statement is the one that says 'Positive analysis deals with objective statements that can be tested or verified,' because it accurately reflects the nature of positive economic analysis.