Which of the following statements about economic policy is false?

• A. Normative analysis is solely based on objective data without any subjective opinions.
• B. Positive analysis describes what is, while normative analysis prescribes what ought to be.
• C. Normative analysis involves value judgments about economic outcomes.
• D. Positive analysis is concerned with factual statements that can be tested.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the difference between positive and normative analysis in economics. Positive analysis deals with objective, testable statements about what is, while normative analysis involves subjective value judgments about what ought to be.
2. Step 2: Review each statement carefully to identify whether it correctly describes positive or normative analysis.
3. Step 3: Evaluate the statement 'Normative analysis is solely based on objective data without any subjective opinions.' Since normative analysis involves value judgments, this statement contradicts the definition and is therefore false.
4. Step 4: Confirm that the other statements align with the accepted definitions: positive analysis describes factual, testable statements, and normative analysis prescribes what ought to be based on values.
5. Step 5: Conclude that the false statement is the one claiming normative analysis is solely objective, as normative analysis inherently includes subjective opinions.