Which of the Following Is an Example of a Normative

question 14

Multiple Choice

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

• A) The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices.
• B) The economy grew at an annual rate of 5 percent during the first quarter of this year.
• C) If two automobile companies merge, it is likely that the price of automobiles will rise.
• D) An increase in international trade benefits some workers but hurts others.
• E) The minimum wage should be increased so that low income workers can afford to keep up with the cost of living.

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Definitions:

Collateral

An asset that a borrower offers to a lender as a security for a loan, which can be seized if the loan is not repaid.

Credit Cost Curve

Graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and opportunity costs.

Opportunity Costs

The cost of foregoing the next best alternative when making a decision.