EC120 Chapter 2: Chapter 2 Economic Theories, Data, and Graphs

• School: WLU
• Department: Economics
• Course: EC120
• Professor: Ken Jackson

Document Summary

Normative statement a statement about what out to be; it is based on a value judgement i. e. - people should be encouraged to save. The inclusion of a value judgement does not make the statement itself normative. Positive statement a statement about what actually is, was, or will be- not based on a value judgement i. e. - raising interest rates encourage people to save. Distinguishing what is actually true from what we would like to be true requires distinguishing between positive and normative statements. Failure to acknowledge the full state of their ignorance leads to disagreements o. Responsible economist makes clear when his view is based on judgement or relevant uncertain facts. Majority agreement on how the economy works and what happens when governments intervene. A minimum wage increases unemployment among young workers. Theories are distinguished by their variables, assumptions, and predictions. Any well-defined item (price/quantity of a commodity) that can take on various specific values.