The Secretary of Labor States That Wage Rates in the Country

question 93

Multiple Choice

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement.

• A) normative; normative
• B) normative; positive
• C) positive; normative
• D) positive; positive
• E) proper; improper

---

Definitions:

Default Risk

The risk associated with a borrower failing to make required payments on debt.

Liquidity Risk

The risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash quickly.

Deferred Consumption Risk

The risk associated with postponing consumption today in order to invest, with the potential of not having enough resources in the future.

Liquidity Risk

The risk that an entity will not be able to meet its short-term financial obligations due to the inability to quickly convert assets to cash without significant loss.