1. Classify each of the following statements as positive or normative. Explain.

Definition ofpositive statements: claims that attempt to describe the world as it is.

Definition ofnormative statements: claims that attempt to prescribe how the world should be.

a. Society faces a short-run trade-off between inflation and unemployment.

b. A reduction in the rate of money growth will reduce the rate of inflation.

c. The Federal Reserve should reduce the rate of money growth.

d. Society ought to require welfare recipients to look for jobs.

e. Lower tax rates encourage more work and more saving.