Which of the Following Is an Example of a Normative

question 135

Multiple Choice

Which of the following is an example of a normative statement?

• A) The unemployment rate is six percent.
• B) There should be no unemployment in an advanced industrial society.
• C) Higher prices cause consumers to buy less.
• D) Equilibrium price implies that quantity demanded equals quantity supplied.

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Definitions:

Dividends

Profit payouts by a corporation to its shareholders, usually as a method of distributing earnings.

Initial Value Method

An accounting approach for investments where the investment is recorded at its original cost without subsequent adjustments for changes in market value.

Equity Method

A method of accounting for investments where the investor's share of the investee's profits or losses is recognized in the investor's income statement.

Investment in Pitts Co.

The allocation of resources, typically financial, into Pitts Company with the expectation of generating a future financial return.