Question : Normative economics often involves:
Option 1: Forecasting economic indicators
Option 2: Analyzing historical economic trends
Option 3: Making policy recommendations based on personal values
Option 4: Conducting econometric analyses
Correct Answer: Making policy recommendations based on personal values
Solution : The correct answer is (c) Making policy recommendations based on personal values.
Normative economics is a branch of economics that deals with value judgments and making policy recommendations. It focuses on what ought to be or what should be done in the economy. It involves analyzing economic situations and formulating policy recommendations based on personal values, ethical considerations, and societal goals. Normative economics is subjective in nature and involves making judgments and choices about the desirability of various economic outcomes. It is distinct from positive economics, which deals with objective analysis of economic phenomena based on empirical data and facts.
