XI. Tasks for thought. 1. Which of the following statements are normative, and which are positive?

1. Which of the following statements are normative, and which are positive?

a) The price of oil more than tripled between 1973 and 1974.

b) In the early 1990s, the poor countries of the world received less than their fair share of world income.

c) The world distribution of income is too unjust, with poor countries having 58 per cent of the world population, but receiving only 4 per cent of world income.

d) One of the goals of the structural economy reforms in Russia is to raise the consumption level of society.

e) Since the 1970s inflation has fallen in most Western economies, but the

unemployment rate has increased.

f) Our government ought to introduce policies to reduce the unemployment rate.

g) Smoking is antisocial and should be discouraged.

h) The imposition of higher taxes on tobacco will discourage smoking.

2. Which of the following statements would not bе true for а pure “command economy"?

а) Firms choose how much labour to employ.

b) The distribution of income is government-controlled.

с) The government decides what should bе produced.

d) Production techniques are not determined by firms.

е) А government planning office decides what will bе produced, and for whom it will bе produced.

3. Figure 1 shows society's choice between social services and private goods in the fопn of а production possibility frontier. The three points А, В, С represent economies in which the government plays а more or less active role. Match each of the points with the most appropriate of the descriptions of hypothetical economies:

а) An economy in which the government intervenes as little as possible, providing only the minimumnecessary amounts of essential services.

b) An economy in which the government takes а great deal of responsibility, taxing at а high level and providing considerable social services.

с) An economy in which the government provides morethan the minimum necessary amounts of social services, but leaves room for a private sector.

25 A

•

• B

• C

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