Question : Normative economics relies on:
Option 1: Statistical analysis and econometric models
Option 2: Subjective preferences and personal opinions
Option 3: Economic theories and mathematical equations
Option 4: Historical data and case studies
Correct Answer: Subjective preferences and personal opinions
Solution : The correct answer is (b) Subjective preferences and personal opinions.
Normative economics relies on subjective preferences and personal opinions when making policy recommendations or value judgments about what should be done in the economy. It involves incorporating ethical considerations, societal goals, and personal values into the analysis. Normative statements in economics express opinions and judgments about how the economy ought to be and what policies should be implemented to achieve desired outcomes.
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