Which of the Following Is an Example of a Normative

question 45

Multiple Choice

Which of the following is an example of a normative - as opposed to a positive - statement?

• A)The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.
• B)The US income tax rate increases with the amount of income earned.
• C)The government should increase the tax on gasoline.
• D)The US unemployment rate increased to 10 percent in 2009.

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Definitions:

Trading Investments

Securities bought and held primarily for selling them in the short term to profit from price fluctuations.

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period, highlighting the company's financial performance.