Positive Economics Questions "What Ought to Be?" While Normative Economics

question 80

True/False

Positive economics questions "What ought to be?" while normative economics predicts the consequences of alternative actions,answering the questions "What is?" or "What will be?"

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Definitions:

Accounting Cycle

The collective process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on financial statements, followed by closure of accounts.

Working Capital

The excess of the current assets of a business over its current liabilities.

Solvency

The ability of a firm to pay its debts as they come due.

Current Ratio

A financial ratio that is computed by dividing current assets by current liabilities.