Introduction to Business EconomicsMTP Oct 19Question 591 of 209
All Questions

Which of the following is a normative economic statement?

Options

AUnemployment rate decreases with industrialization
BEconomics is a social science that studies human behaviour.
CThe minimum wage should be raised to Rs. 200/- per day
DIndia spends a huge amount of money on national defence.
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Correct Answer

✅ Option c — The minimum wage should be raised to Rs. 200/- per day

All Options:

  • AUnemployment rate decreases with industrialization
  • BEconomics is a social science that studies human behaviour.
  • CThe minimum wage should be raised to Rs. 200/- per day
  • DIndia spends a huge amount of money on national defence.

Detailed Solution & Explanation

• Normative economic statements are subjective and express opinions or value judgments about what *should be*. They often include words like "should," "ought to," or "better." • Positive economic statements, in contrast, are objective and factual. They describe what *is* and can be tested or verified. • Option (C) "The minimum wage should be raised to Rs. 200/- per day" is a normative statement because it expresses an opinion or a recommendation about what ought to happen. It's a value judgment, not a verifiable fact. • Option (A) "Unemployment rate decreases with industrialization" is a positive statement. It describes a potential cause-and-effect relationship that can be tested and verified with data. • Option (B) "Economics is a social science that studies human behaviour" is a positive statement. It's a factual definition of economics. • Option (D) "India spends a huge amount of money on national defence" is also a positive statement. It's a factual observation that can be confirmed by looking at government budgets. • Therefore, only option (C) fits the definition of a normative economic statement as it involves a value judgment about what policy action *should* be taken.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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