Normative and Positive Statements, Correlation vs. Causation

Front

Positive statement is____ and normative statement is ____.

Back

reflects personal beliefs, a statement based on facts;

Front

Below are the positive statements, except_____.
Options:
demand curve for normal goods shift to the right because the income increase;
government should increase the minimum salary because citizens can better afford essential goods;
excessive money creation leads to inflation;
higher interest rates reduce consumer borrowing.

Back

government should increase the minimum salary because citizens can better afford essential goods;

Front

It is a normative statement. Why?

Back

It suggests a course of action based on subjective values.

Front

Which of the following is a characteristic of positive statements in economics? They are subjective and based on personal opinions; They can be tested and verified through empirical research; They are used to express value judgments about economic policies. They cannot be proven or disproven.

Back

They can be tested and verified through empirical research.

Front

Which of the following statements best explains why correlation does not imply causation? If two variables are correlated, one must always cause the other; Correlation means two variables are always dependent on each other; Correlation only shows a relationship between variables but does not prove one causes the other; If two events occur together frequently, it is safe to assume one causes the other.

Back

Correlation only shows a relationship between variables but does not prove one causes the other.