University of Central Florida (UCF) ECO2013 Principles of Macroeconomics Practice Exam 1

A statement that makes a claim about how the world should be is categorized as a normative statement. Normative statements express opinions or judgments about what ought to be, often incorporating values or subjective beliefs. They are not testable or verifiable through empirical evidence because they reflect preferences rather than objective observations.

In contrast, descriptive statements focus on objective facts and the way the world is, without imparting any judgment. Positive statements, similarly, analyze facts and relationships and can be tested or validated through data and evidence. Hypothetical statements propose scenarios that are contingent or conditional, often exploring outcomes based on specific assumptions.

Thus, defining normative statements helps to distinguish them from other types of statements in economics, emphasizing their role in discussions about policies and welfare rather than empirical observations.