Which of the Following Is a Normative Economic Statement

question 140

Multiple Choice

Which of the following is a normative economic statement?

• A)Rising corn prices have increased the price of corn-based ethanol.
• B)With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased.
• C)The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power.
• D)Farmers should not be allowed to grow and sell genetically-modified crops.

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Definitions:

Interest Rates

The cost of borrowing money or the return on investing, typically expressed as a percentage of the principal, and set by central banks or determined by the market.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, creditors, or internal controls.

Actual Reserves

The total amount of funds that a bank has on deposit at the Federal Reserve, plus any cash physically held by the bank.

Reserve Requirement

A regulation set by central banks requiring commercial banks to hold a certain proportion of their deposits as reserves.