Which of the following statements best illustrates the difference between positive and normative analysis in evaluating Carnegie's defense of millionaires?

• A. Positive analysis examines the factual impact of millionaires on economic growth, while normative analysis assesses whether their wealth distribution is fair or just.
• B. Positive analysis and normative analysis both rely solely on moral judgments about the role of millionaires.
• C. Positive analysis is concerned only with personal opinions about millionaires, while normative analysis focuses on statistical data.
• D. Normative analysis ignores ethical considerations, whereas positive analysis is based on value judgments.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definitions of positive and normative analysis in economics. Positive analysis deals with objective, fact-based statements that can be tested or verified, such as the impact of millionaires on economic growth. Normative analysis involves subjective value judgments about what ought to be, such as whether the wealth distribution is fair or just.
2. Step 2: Identify the key difference between the two types of analysis: positive analysis focuses on 'what is' (factual and descriptive), while normative analysis focuses on 'what ought to be' (prescriptive and ethical).
3. Step 3: Examine the given statements and determine which one correctly contrasts positive and normative analysis based on their definitions. Look for the statement that pairs factual impact with positive analysis and fairness or justice with normative analysis.
4. Step 4: Recognize that statements suggesting both analyses rely solely on moral judgments or that positive analysis is about personal opinions are incorrect because positive analysis is objective and fact-based.
5. Step 5: Conclude that the correct statement is the one that says: 'Positive analysis examines the factual impact of millionaires on economic growth, while normative analysis assesses whether their wealth distribution is fair or just,' as it accurately reflects the distinction between positive and normative analysis.