Question

Which of the following statements would you consider to be a normative one?

• A. Faster economic growth should result if an economy has a higher level of investment.
• B. Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure.
• C. Higher levels of unemployment will lead to higher levels of inflation.
• D. The average level of growth in the economy was faster in the 1990s than the 1980s.

Answer 1

Answer: (B)

Changing the level of interest rates is a better way of managing the economy than using taxation and government expenditure.

A normative statement explains what should be base of the subject according to the belief through valued judgement that describes the fairness of the subject on public policy.
Therefore, 'Changing level of interest rate is a better way of managing the economy' is just a belief that change in interest rate will bring effectiveness in the economy.