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(Normative versus Positive Analysis) Determine whether each of the following statements is normative or positive: The U. unemployment rate was below...

(Normative versus Positive Analysis) Determine whether each of the following statements is normative or positive:

a. The U.S. unemployment rate was below 4.6 percent in 2006.
b. The inflation rate in the United States is too high.
c. The U.S. government should increase the minimum wage.
d. U.S. trade restrictions cost consumers $40 billion annually.

15. (Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this chapter. Then identify the fallacy, or mistake in thinking, in each of the following statements:

a. Raising taxes always increases government revenues.
b. Whenever there is a recession, imports decrease. Therefore, to stop a recession, we should increase imports.
c. Raising the tariff on imported steel helps the U.S. steel industry. Therefore, the entire economy is helped.
d. Gold sells for about $625 per ounce. Therefore, the U.S. government could sell all the gold in Fort Knox at $625 per ounce and reduce the national debt.


HOMEWORK—CHAPTER 3

16. (Household Production) Many households supplement their food budget by cultivating small vegetable gardens. Explain how each of the following might influence this kind of household production:

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