Question

The statement 'Other things being constant, an increase in money supply will increase the price level.' is related to:

• A. Normative economics
• B. Positive economics
• C. Micro economics
• D. All of the above

Hint:

Positive economics is focused on explaining and predicting economic phenomena.

Answer 1

The Correct Option is B

Step 1: Understand positive economics.
Positive economics focuses on objective analysis and descriptions of economic phenomena. It deals with "what is" and is concerned with cause and effect, such as how an increase in money supply affects price levels.
Step 2: Normative economics vs Positive economics.
Normative economics, on the other hand, deals with value judgments and what ought to be. The statement provided is a positive statement, as it explains a cause and effect without making any judgments.
Step 3: Conclusion.
Thus, the correct answer is (B) Positive economics, which deals with factual, cause-and-effect relationships. Final Answer: \[ \boxed{\text{Positive economics.}} \]