Question

10.
Which of these is Normative Economics
(a) 25 percent population of India is below poverty line
(b) Increase in FDI has increased the GDP of India
(c) Equal distribution of income will make India poverty free
(d) Higher welfare spending by government increases the
Aggregate Deman(d)​

Answer 1

Answer:

(d) Higher welfare spending by government increases the aggregate deman

Explanation:

(d) Higher welfare spending by government increases the aggregate deman

Answer 2

Equal distribution of income will make India poverty free is Normative Economics

• Normative economics deals with value assessments and personal ideas of how the economy ought to function.
• It entails formulating suggestions for what should be done in the economy in accordance with some moral or ethical principles.
• Equal distribution of income will make India poverty free is a normative statement.
• The other options are incorrect as -

1. Option (a) is a positive economic statement and explains how the economy actually operates. It can be validated because data of 25% is already given.
2. Option (b) is also a positive economic statement, as it mentions that FDI has increased GDP. Further, it is based on genuine knowledge.
3. Option (d) is a strong economic statement explaining the connection among aggregate demand and welfare spending.

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