Which of the following methods may an economist use to test a hypothesis in positive analysis?

• A. Relying solely on personal opinions
• B. Collecting and analyzing empirical data
• C. Making value judgments about policy outcomes
• D. Using ethical reasoning to determine right and wrong

Answer: (B)

Verified step by step guidance

1. Understand that positive analysis in economics focuses on objective, testable statements about how the economy works, without involving personal opinions or value judgments.
2. Recognize that to test a hypothesis in positive analysis, an economist must use methods that rely on observable and measurable evidence.
3. Identify that collecting and analyzing empirical data involves gathering real-world data and using statistical or econometric techniques to verify if the hypothesis holds true.
4. Note that relying solely on personal opinions or making value judgments involves subjective views, which are part of normative analysis, not positive analysis.
5. Conclude that the appropriate method for testing a hypothesis in positive analysis is collecting and analyzing empirical data, as it provides objective evidence to support or refute the hypothesis.