Which of the Following Is an Example of a Normative

question 173

Multiple Choice

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

• A) If the money supply falls, interest rates will rise.
• B) Teenage unemployment would be lower if there were no minimum wage.
• C) The quantity of shirts sold increases as the price of shirts decreases.
• D) The federal government's total spending should be reduced.
• E) If interest rates go up, then fewer buildings will be constructed.

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Definitions:

Compounded Semi-Annually

The method of calculating interest where the accrued interest is added to the principal sum every six months.

Lump Payment

A single, large payment made at once, as opposed to smaller, periodic payments.

Compounded Semi-Annually

This is the process where interest is added to the principal sum of a loan or deposit twice a year, resulting in interest being earned on interest from that point on.

Replacement Stream

A series of cash flows intended to replace the benefits of an asset or investment over time.