Which of the following is a normative economic statement, that is, one that says what ought to be?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rich people should pay a larger share of their income as tax.
Positive economics describes how things are and how they work, while normative economics says how things ought to be. Only option (1), with the word “should”, gives a value judgement; the other three describe how markets work.