Normative and positive statements

etermine whether each of the following topics would more likely be studied in

microeconomics or macroeconomics.

-The effect of government regulation on a monopolist’s production decisions

-The effect of a large government budget deficit on the economy’s price level

-The effects of the Internet on the pricing of used cars

*Microeconomics

*Macroeconomics

6. Normative and positive statements

The following table contains statements that provide some analysis of policies that address globalization.

Categorize each of them as positive or normative.

-In the past decade, Canadian companies have outsourced millions of jobs overseas.

-Companies that outsource jobs are acting immorally.

-If the Canadian government were to institute higher tariffs on imports, companies would stop outsourcing jobs.

-The Canadian government should institute higher tariffs on imports.

*Positive

*Normative

7. Agreement and disagreement among economists

Suppose that Gilberto, an economist from a business school in Nova Scotia, and Juanita, an economist from a university in Quebec, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:

Juanita: I think it’s safe to say that, in general, the savings rate of households in today’s economy is much lower than it really needs to be to sustain the improvement of living standards.

Gilberto: I think a switch from the income tax to a consumption tax would bring growth in living standards.

Juanita: You really think households would change their saving behaviour enough in response to this to make a difference? Because I don’t.

The disagreement between these economists is most likely due to  BLANK? .

-differences in value

-differences in scientific judgement

-differences in perception versus reality

Despite their differences, with which proposition are two economists chosen at random most likely to agree?

-Rent ceilings reduce the quantity and quality of available housing.

-Having a single income tax rate would improve economic performance.

-Immigrants receive more in government benefits than they contribute in taxes.