The Difference Between Positive and Normative Economics Is That

question 175

Multiple Choice

The difference between positive and normative economics is that:

• A) positive economics is what you are learning in school whereas normative economics is what you will learn in the real world.
• B) normative economics is based on proven fact whereas positive economics is based on what should be.
• C) positive economics describes, explains, and predicts economic events whereas normative economics recommends what economic policies should look like.
• D) economists always use positive economics whereas politicians always use normative economics.

---

Definitions:

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios), often for the purpose of planning through uncertainty.

Sensitivity Analysis

Analyzes how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Simulation Analysis

Involves the use of mathematical models to predict the outcome of various financial strategies under different conditions.

Cash Break-Even

Cash break-even is the point at which a business's cash receipts equal its cash expenses, indicating the minimum amount of sales needed to cover all cash outflows without considering any profit.