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Which of the following statements would you consider to be a normative one?
- a)Faster economic growth should result if an economy has a higher level of investment.
- b)Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure.
- c)Higher levels of unemployment will lead to higher levels of inflation.
- d)The average level of growth in the economy was faster in the 1990s than the 1980s.
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
Which of the following statements would you consider to be a normative...
Normative Statement: Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure.
Explanation:
A normative statement is a statement that expresses an opinion or a value judgment rather than a factual statement. It is subjective and cannot be tested or proven to be true or false. In this question, option B is a normative statement because it expresses an opinion about the best way to manage the economy.
Advantages of Changing Interest Rates over Taxation and Government Expenditure:
1. Flexibility: Changing interest rates is a more flexible tool than taxation and government expenditure. Interest rates can be adjusted quickly and easily by the central bank, whereas changes in taxation and government expenditure require a longer time to take effect.
2. Impact on Investment: Interest rates have a direct impact on the cost of borrowing and, therefore, affect investment decisions. Lower interest rates encourage borrowing and investment, which can lead to higher economic growth.
3. Control of Inflation: Interest rates can be used to control inflation by increasing borrowing costs when inflation is high. This can reduce demand and slow down the economy, reducing the inflationary pressure.
4. Reduced Government Intervention: Changing interest rates allows the government to intervene in the economy without directly controlling it. This can reduce the perception of government intervention and promote a more market-based economy.
Conclusion:
In conclusion, option B is a normative statement as it expresses an opinion about the best tool to manage the economy. Changing interest rates has some advantages over taxation and government expenditure, including its flexibility, impact on investment, control of inflation, and reduced government intervention.
Explanation:
A normative statement is a statement that expresses an opinion or a value judgment rather than a factual statement. It is subjective and cannot be tested or proven to be true or false. In this question, option B is a normative statement because it expresses an opinion about the best way to manage the economy.
Advantages of Changing Interest Rates over Taxation and Government Expenditure:
1. Flexibility: Changing interest rates is a more flexible tool than taxation and government expenditure. Interest rates can be adjusted quickly and easily by the central bank, whereas changes in taxation and government expenditure require a longer time to take effect.
2. Impact on Investment: Interest rates have a direct impact on the cost of borrowing and, therefore, affect investment decisions. Lower interest rates encourage borrowing and investment, which can lead to higher economic growth.
3. Control of Inflation: Interest rates can be used to control inflation by increasing borrowing costs when inflation is high. This can reduce demand and slow down the economy, reducing the inflationary pressure.
4. Reduced Government Intervention: Changing interest rates allows the government to intervene in the economy without directly controlling it. This can reduce the perception of government intervention and promote a more market-based economy.
Conclusion:
In conclusion, option B is a normative statement as it expresses an opinion about the best tool to manage the economy. Changing interest rates has some advantages over taxation and government expenditure, including its flexibility, impact on investment, control of inflation, and reduced government intervention.
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Community Answer
Which of the following statements would you consider to be a normative...
Normative statment gives value judgment
"what ought to be" (esa hona chaiye)
postive stament gives fact "what is" (esa hai) option a is gives value judgment
"what ought to be" (esa hona chaiye)
postive stament gives fact "what is" (esa hai) option a is gives value judgment
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Which of the following statements would you consider to be a normative one?a)Faster economic growth should result if an economy has a higher level of investment.b)Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure.c)Higher levels of unemployment will lead to higher levels of inflation.d)The average level of growth in the economy was faster in the 1990s than the 1980s.Correct answer is option 'B'. Can you explain this answer?
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