In the context of positive and normative analysis, if two variables change in the same direction, which of the following best describes their relationship?

• A. Their relationship is purely normative.
• B. They are positively correlated.
• C. There is no correlation between them.
• D. They are negatively correlated.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the difference between positive and normative analysis. Positive analysis deals with objective, fact-based statements that can be tested, while normative analysis involves subjective, value-based judgments about what ought to be.
2. Step 2: Recognize that when two variables change in the same direction, it means that as one variable increases, the other also increases, or as one decreases, the other decreases.
3. Step 3: Recall the concept of correlation in statistics and economics. When two variables move together in the same direction, they are said to be positively correlated.
4. Step 4: Note that correlation describes the relationship between variables without implying any value judgment, so it is part of positive analysis rather than normative analysis.
5. Step 5: Conclude that the best description of two variables changing in the same direction is that they are positively correlated.