Which of the Following Statements Is a Normative as Opposed

question 229

Multiple Choice

Which of the following statements is a normative as opposed to a positive economic statement?

• A) Consumer spending helps to create jobs.
• B) If the price of gasoline goes up, people buy less gasoline.
• C) Labor unions should be allowed to organize in every industry.
• D) Government intervention in markets is common in many countries.

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Definitions:

Internal Rate of Return (IRR)

A metric used in capital budgeting to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows equal to zero.

Net Present Value (NPV)

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Cost Allowance (CCA)

A yearly deduction or depreciation on the cost of certain assets that can be claimed for tax purposes in Canada.

Operating Cash Flow

Cash generated from the core business operations of a company, excluding financing and investment activities.