Positive and Normative Analysis quiz #1 Flashcards
Positive and Normative Analysis quiz #1
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How are decisions made under certainty in economics? Decisions under certainty are made when all relevant information is known, allowing for clear, factual analysis without ambiguity. Which best describes the purpose served by economic models within an economic system? Economic models simplify complex realities to help analyze and predict economic behavior using positive statements. Which of the following best summarizes Adam Smith's perspective in the passage? Adam Smith emphasized factual analysis of market behavior, focusing on how markets function rather than prescribing what should happen. Which of the following is a positive economic statement? A positive economic statement describes facts, such as 'Increasing the minimum wage will lead to higher unemployment.' Which of the following is a normative statement? A normative statement expresses an opinion, such as 'The government should increase the minimum wage.' Which of the following is a normative economic statement? A normative economic statement includes value judgments, like 'Taxes ought to be reduced to improve economic growth.' Which of the following should not be included in the analysis when making a decision? Irrelevant information or personal opinions should not be included in positive economic analysis. Which of the following help measure the quality of a good economic model? A good economic model is measured by its ability to accurately describe and predict real-world outcomes using verifiable statements. Which of the following explains the concept of explicit costs? Explicit costs are direct, out-of-pocket payments for resources used in production, such as wages and materials. Which of the following is an example of a positive economic statement? 'Higher taxes reduce consumer spending.' Which of the following are factors in a firm's legal environment? Factors include laws, regulations, and property rights that affect business operations. Which of the following is not one of the four assumptions about utility maximization? Normative opinions about what consumers should do are not an assumption of utility maximization. Which of the following statements is normative? 'The government should provide free healthcare to all citizens.' Which of the following is/are not enacted by government? Personal opinions and market-driven decisions are not enacted by government. Which of the following is an example of a positive statement? 'Unemployment increased by 2% last year.' Which of the following is an example of a normative statement? 'Unemployment should be reduced by government intervention.' Which of the following could be a reason for the type of market failure known as government failure? Government failure can occur when policies are based on normative statements rather than factual analysis. Which of the following is not a characteristic of a good economic model? A good economic model does not rely on untestable opinions or normative statements. What methods may an economist use to test a hypothesis? Economists use empirical data and scientific methods to test positive statements and hypotheses. Which of these contexts describes a situation that is certain? A situation where all relevant facts are known and outcomes can be predicted accurately. What is true about the economic idea of ceteris paribus? Ceteris paribus means 'all other things being equal,' allowing for analysis of one variable at a time. Which of the following best describes a constant in economic analysis? A constant is a variable that does not change during the analysis, helping isolate effects. Which of the following is not a result of specialization? Specialization does not result in increased reliance on normative statements. Which of the following statements about economic models is not correct? Economic models are not based on opinions; they rely on positive, testable statements. Which statement applies to the economic model of social responsibility? The model may include both positive analysis of outcomes and normative views on what firms ought to do. Which of the following statements about an economic model is true? Economic models use positive statements to describe and predict economic behavior. From an economist’s perspective, what is the difference between positive and normative analysis? Positive analysis describes facts; normative analysis expresses opinions about what should happen. Which of the following is not consistent with the efficient market hypothesis? Relying on normative statements about market outcomes is not consistent with the efficient market hypothesis. Which of the following is not true about economic models? Economic models do not rely on untestable opinions or normative statements. Assuming ceteris paribus, what does this allow economists to do? It allows economists to isolate the effect of one variable by holding others constant. Which of the following is true of an economic model? Economic models use positive statements to explain and predict economic phenomena. Which of these is a positive incentive for domestic producers? A factual increase in demand for domestic goods is a positive incentive. Which concept describes the idea that government and government officials are not above the law? The rule of law ensures government officials are subject to the same laws as citizens. How does producing plastics benefit the economy? Producing plastics can increase employment and output, which are positive economic effects. Which of the following refers to a general belief about the role and purpose of government? A normative statement expresses beliefs about what government should do. What is the best test of an economic model? The best test is whether its positive statements accurately predict real-world outcomes. If variables change in the same direction, what does this indicate? It indicates a positive association between the variables. Which of the following is not true of the specialization of labor? Specialization does not rely on normative statements about how labor should be divided. Over which of the following determinants do you have most control? Individuals have most control over their own choices and actions, which can be analyzed positively. Which of the following is an example of a normative - as opposed to a positive - statement? 'The government ought to provide free education.'
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