Which of the following is a normative statement?

• A. The inflation rate rose by 2% last year.
• B. A decrease in taxes will lead to higher consumer spending.
• C. The unemployment rate is currently 5%.
• D. Government should increase the minimum wage to reduce poverty.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the difference between positive and normative statements. Positive statements describe facts or cause-and-effect relationships and can be tested or verified. Normative statements express opinions, values, or what ought to be done and cannot be tested empirically.
2. Step 2: Review each statement to classify it. For example, 'The inflation rate rose by 2% last year' is a positive statement because it reports a measurable fact.
3. Step 3: Identify statements that predict outcomes based on economic theory or data, such as 'A decrease in taxes will lead to higher consumer spending.' This is also a positive statement because it can be tested.
4. Step 4: Recognize statements that express current measurable conditions, like 'The unemployment rate is currently 5%.' This is positive as it states a fact.
5. Step 5: Spot the statement that expresses a value judgment or recommendation, such as 'Government should increase the minimum wage to reduce poverty.' This is a normative statement because it reflects an opinion about what ought to be done.