Question

Economists who work for the government are often called on to make policy recommendations. Their recommendations:

	A. contain only normative statements and it is important that the public be able to distinguish them from positive statements.
	B. contain both positive and normative statements and it is important that the public be able to distinguish between the two.
	C. contain only positive statements.
	D. contain only normative statements.

Answer 1

Option D.contain only normative statements.

Explanation: Normative statements deal with opinions, suggestions, value judgments, etc. Therefore, policy recommendations are by definition normative statements. Following are some examples of such statements:

• The minimum wage should be increased
• Defense budget needs to be cut
• Interest rate should be increased by the Fed

Positive statements deal with empirical observations or facts. For example, 'the current unemployment rate is 2.4%' is a positive statement.