ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The branch of economic analysis that describes the way economy actually works.
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The branch of economic analysis that makes prescriptions about the way economy should work.
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Either A or B
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None of the above
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Detailed explanation-1: -Normative economics aims to determine people’s desirability or the lack thereof to various economic programs, situations, and conditions by asking what should happen or what ought to be. Therefore, normative statements typically present an opinion-based analysis in terms of what is thought to be desirable.
Detailed explanation-2: -Normative economic analysis refers to the analysis in which we study whether a particular mechanism is desirable or not. In this analysis, we study what ought to be the desired situation or in what ways the economic problems should be solved.
Detailed explanation-3: -Normative economics focuses on the value of economic fairness, or what the economy “should be” or “ought to be.” While positive economics is based on fact and cannot be approved or disapproved, normative economics is based on value judgments.
Detailed explanation-4: -A normative economic statement refers to “what ought to be” or it makes an assessment of an activity and offers advice. Hence, the federal minimum wages should be raised to $ 4. 50 per hour is a normative statement.
Detailed explanation-5: -Macroeconomics is a branch of economics that studies how an overall economy-the markets, businesses, consumers, and governments-behave. Macroeconomics examines economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.