Positive and normative statements - Introduction to Economics

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Positive and normative statements



Positive Statements

A positive statement are statements that can be tested, changed, or rejected by checking it against facts.

Example: Higher interest rates will reduce house prices.

Normative Statements

A normative statement is a subjective statement of opinion which cannot be tested.

Example: The government should increase the minimum wage.

Unscrambling Cause and Effect

Ceteris paribus: other things being equal, or other things remaining the same.

In other words, we let one factor vary and hold the other relevant factors constant to investigate the effects of the factor in economic models. This will allow us to see the cause and effect.

  • Intro Lesson
    Positive & Normative Statements Overview:
    • a)
      "Poverty is the most serious economic problem."
    • a)
      "The government should ban smoking."
    • a)
      "Increasing income tax will discourage the unemployed to find work."
    • a)
      "All things being equal"
    • b)
      "Other things being equal"
    • c)
      "All things being different"
    • d)
      "Other things being different"
    • a)
      By varying one factor and holding all other relevant factors ___________, we can investigate the _____________ of the factor.
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Positive and normative statements

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