Q. Which of the following is a statement of normative nature in economics?

1. Economics is a study of choices /alternatives.
2. The government should be concerned with how to reduce unemployment.
3. According to the estimate, in spite of severe shortage, more than 10% of houses in Indian cities are vacant.
4. Accommodation of refugees is posing a big problem for Europe.

Select the correct answer from the codes given below:
Answer: Only 1
Notes: Only the first statement is correct with reference to normative nature in economics. In economics, we try to analyse the different mechanisms and figure out the outcomes which are likely to result under each of these mechanisms. We also try to evaluate the mechanisms by studying how desirable the outcomes resulting from them are. Often a distinction is made between positive economic analysis and normative economic analysis depending on whether we are trying to figure out how a particular mechanism functions or we are trying to evaluate it. In positive economic analysis, we study how the different mechanisms function, and in normative economics, we try to understand whether these mechanisms are desirable or not.

This question is part of UPSC Daily 20 MCQ Series Course on GKToday Android app.