6. Classify each of the following statements as positive or normative. Explain. a. Society faces a short-run trade-off between inflation and unemployment. b. A reduction in the rate of money growth will reduce the rate of inflation. c. The Federal Reserve should reduce the rate of money growth. d. Society ought to require welfare recipients to look for jobs. e. Lower tax rates encourage more work and more saving.

Positive

b. Positive

c. Normative

d. Normative

e. Positive

Explanation:

Positive Economics is objective and statements are usually based on facts and economic theory. They can be tested.  

For example, there is a theory known as Phillips curve. It is when society faces a short-run trade-off between inflation and unemployment. Also it is known that lower tax increases disposable income which increases savings or consumption.

Normative economics is based value judgements, opinions and perspectives. For example, the statement - The Federal Reserve should reduce the rate of money growth is an opinion

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