For each of the following statements, indicate whether they are positive, normative or both.

a. If the Federal Reserve raises interest rates, demand for housing is likely to fall.

multiple choice 1

• Neither a normative nor a positive statement
• Both a normative and a positive statement
• Positive statement
• Normative statement

b. The Federal Reserve should raise interest rates to keep inflation at an acceptably low level.

multiple choice 2

• Both a normative and a positive statement
• Positive statement
• Neither a normative nor a positive statement
• Normative statement

c. Stock prices are likely to fall over the next year as the economy slows.

multiple choice 3

• Both a normative and a positive statement
• Positive statement
• Normative statement
• Neither a normative nor a positive statement

d. A reduction in the capital gains tax (the tax on profits made in the stock market) would lead to a 10 to 20 percent increase in stock prices.

multiple choice 4

• Normative statement
• Positive statement
• Neither a normative nor a positive statement
• Both a normative and a positive statement

e. Congress should not reduce capital gains taxes without also providing tax breaks for lower-income people.

multiple choice 5

• Normative statement
• Positive statement
• Both a normative and a positive statement
• Neither a normative nor a positive statement