A tax designed to reduce the disparities in wealth between the rich and poor is called a progressive tax.
In a progressive tax system, the tax rate increases as the income of the taxpayer increases. This means that those with higher incomes pay a higher percentage of their income in taxes than those with lower incomes.
Progressive taxes are often used by governments as a way to redistribute wealth and reduce income inequality. The idea behind progressive taxation is that those who can afford to pay more should pay more, while those who have less should pay less. This can help to reduce poverty and increase social welfare.
However, progressive taxation can also have negative effects. Some argue that it can reduce incentives to work and invest, as those who earn more may be disincentivized to earn more due to higher tax rates. Additionally, it can be difficult to determine the appropriate tax rates and thresholds for a progressive tax system, and there may be concerns about tax evasion and avoidance.
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A tax designed to reduce the disparities in wealth between the rich and poor is called a progressive tax.
In a progressive tax system, the tax rate rises as the amount subject to taxation rises. In other words, the amount of income that is subject to tax rises in proportion to an individual's income. This can serve to lessen the wealth gaps between the rich and the poor since people with higher earnings will be required to pay a bigger percentage of their income in taxes than people with lower incomes. Governments frequently utilize progressive taxation to pay for social welfare programs and to transfer wealth to the poor.
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Which is the definition of competitiveness?
Responses
1. the ability to create an environment built on support and encouragement
2. steadfastness and commitment in achieving a goal
3. doing something that might result in loss to achieve business goals
4. the property of having a strong desire for success and achievement
e account director, Charlie Watt Tiffany Lang, digil medis super at Fatti The fist step, planning, atiti fence consumers w the second step, implementati planners select and schedule the media to deliver the message to the target audience. evaluation, utilizes thang thetrics to assess if a campaign is accomplishing its objective The case also describes how Arby's "We Have the Meats Campaign" was deve Fallon. The planning part of the process determined that the challenge was to change positioning of Arby's from a place for just roast beef to a place where everybody can something to eat. The implementation step utilized a television ad showing a chef slic meats available in Arby's sandwiches. The assessment phase consists of monitoring indicates that the campaign is a huge success. Fallon Video: 1. What is Fallon's philosophy regarding its business model and culture?
Fallon's philosophy revolves around the power of creativity in advertising and its ability to make a significant impact on their clients' businesses.
Fallon's philosophy regarding its business model and culture is centered around the belief that creativity drives business success. They prioritize creativity in everything they do and believe that it is the key to creating impactful and effective advertising campaigns.
Fallon focuses on creating a culture that fosters and celebrates creativity. They believe in providing an environment where their employees can freely express their ideas, take risks, and push the boundaries of traditional advertising. They encourage collaboration and value diverse perspectives, recognizing that innovation often comes from bringing different voices together.
In terms of their business model, Fallon strives to deliver creative solutions that not only capture attention but also drive business results for their clients. They understand the importance of understanding their clients' objectives and target audience, and they leverage their creative expertise to develop strategies and campaigns that effectively communicate the desired message.
Overall, Fallon's philosophy revolves around the power of creativity in advertising and its ability to make a significant impact on their clients' businesses.
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Note- The complete question is
e account director, Charlie Watt Tiffany Lang, digil medis super at Fatti The fist step, planning, atiti fence consumers w the second step, implementation planners select and schedule the media to deliver the message to the target audience. evaluation, utilizes thang theatrics to assess if a campaign is accomplishing its objective The case also describes how Arby's "We Have the Meats Campaign" was deve Fallon. The planning part of the process determined that the challenge was to change positioning of Arby's from a place for just roast beef to a place where everybody can something to eat. The implementation step utilized a television ad showing a chef slic meats available in Arby's sandwiches. The assessment phase consists of monitoring indicates that the campaign is a huge success. Fallon Video: 1. What is Fallon's philosophy regarding its business model and culture? 2. Describe the steps Fallon uses to develop a campaign for a client. An 3. What factors contributed to the success of the Arby's campaign? What skills and interests will help future advertising professionals?
joanna received $60,000 compensation from her employer, the value of her stock in abc company appreciated by $5,000 during the year (but she did not sell any of the stock), and she received $30,000 of life insurance proceeds from the death of her husband. what is the amount of joanna's gross income from these items? multiple choice $60,000 $65,000 $95,000 $90,000
Gross income refers to the total amount of income earned by an individual or business before any deductions, such as taxes and expenses, are made. It includes all sources of income, such as wages, salaries, and investment returns.
To determine Joanna's gross income from these items, we need to consider which amounts are considered taxable income. Here's the breakdown:
1. Compensation from her employer ($60,000) - This amount is taxable income.
2. Value of her stock in ABC company appreciated by $5,000 - This amount is not taxable income since she did not sell any of the stock (unrealized gain).
3. Life insurance proceeds from the death of her husband ($30,000) - This amount is generally not considered taxable income.
So, Joanna's gross income from these items would be:
$60,000 (compensation from her employer)
The correct answer is $60,000.
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What are 3 reasons for having a checking account?
The major reason for having the checking account are financial safety, easy access to your funds, savings from check-cashing fees, and overall financial peace of mind.
Checking account:
In accounting, checking account is the type of bank account that allows you to easily deposit and withdraw money for daily transactions.
Given,
Here we need to find the 3 reasons for having a checking account.
Based on the given definition we know that the checking account is the that is perfectly suitable for the daily transactions actions.
Therefore, the reason behind the usage of checking account is listed as,
=> helps you manage your day-to-day finances, such as paying your bills,
=> receiving direct deposit of your paycheck, and
=> withdrawing cash from an ATM.
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Which of the following is an example of a tangible product? O a. A computer O b. Lawn care O c.. Customer service O d. Accounting services
Option A is correct. Computer is an example of Tangible Product.
A tangible product is a physical item that can be seen and touched. It is a type of product that is not just an idea or a service, but something that can be physically owned and used by a customer. Examples of tangible products include consumer goods such as electronics, appliances, and clothing, as well as industrial products such as machinery, tools, and raw materials.
Tangible products often have a longer lifespan and can provide long-term value to customers. They can also be manufactured and sold on a large scale, making them a popular choice for businesses looking to expand their offerings. However, tangible products also have some disadvantages, such as the need for storage, shipping, and physical distribution, which can increase costs and complexity.
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Welfare includes all of the following EXCEPT
(a) Social Security
(b) Medicare
(c) Occupational Safety and Health Administration
(d) Medicaid
Answer:
(C) Occupational Safety and Health Administration
You be the Arbitrator Bereavement Leave
As arbitrator, what would be your award and opinion in this arbitration? Identify the key, relevant section(s), phrases, or words of the collective bargaining agreement (CBA) and explain why they were critical in making your decision. What actions might the employer and/or the union have taken to avoid this conflict?
As an AI language model, I can provide a general framework for approaching the scenario as an arbitrator, but please note that actual arbitration requires a thorough review of specific facts, applicable laws, and the collective bargaining agreement (CBA) involved.
Here is a general approach to addressing the arbitration:
Review the Collective Bargaining Agreement (CBA):
Read the relevant sections of the CBA that pertain to bereavement leave, including any specific language, limitations, or conditions mentioned.
Identify any relevant clauses, definitions, or provisions that outline the rights and obligations of the employer and the union regarding bereavement leave.
Analyze the Facts:
Review the facts of the case, including the specific circumstances of the employee requesting bereavement leave.
Determine if the employee meets the eligibility criteria outlined in the CBA for taking bereavement leave.
Consider any evidence or documentation provided by both parties regarding the situation.
Apply the CBA:
Assess whether the employee's request for bereavement leave aligns with the provisions and conditions specified in the CBA.
Consider any limitations or restrictions imposed by the CBA, such as the duration or timing of bereavement leave.
Examine any clauses that address the definition of "immediate family" or specific requirements for notification or documentation.
Consider Arbitration Principles:
Apply principles of fairness, reasonableness, and consistency in interpreting the CBA and making a decision.
Evaluate any past practices or precedents established by the parties in similar situations.
Determine the Award and Provide an Opinion:
Based on the interpretation of the CBA and the facts presented, make a decision on whether the employee is entitled to bereavement leave and, if so, the extent of the leave.
Clearly state the reasons and references to the specific sections, phrases, or words of the CBA that support the decision.
Provide an opinion explaining how the decision aligns with the intent and provisions of the CBA and any applicable laws.
Avoiding Conflict:
Both the employer and the union could have taken proactive steps to avoid this conflict, such as clearly communicating the bereavement leave policy to employees and providing training on how to request and handle such situations.
They could have engaged in effective communication and problem-solving, seeking to find a mutually agreeable solution that respects the rights and needs of both the employer and the employees.
Regular review and updating of the CBA could also help address any ambiguities or gaps in the provisions related to bereavement leave.
Remember, this response is a general guide and not a substitute for legal advice or specific knowledge of the relevant CBA. In an actual arbitration case, it is important to carefully review all the facts, consult legal resources, and consider the specific language and provisions of the CBA in order to make a fair and informed decision.
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Half of brainly rn
...............
Answer:
it is one-fourth of the no whose half is taken
Answer:
brainliest please :)
Explanation:
revenues for services performed but not yet recorded or collected in cash are accrued revenues. failure to prepare a year-end adjusting entry to record accrued revenues would result in financial statements that
Revenues for services performed but not yet recorded or collected in cash are accrued revenues. Failure to prepare a year-end adjusting entry to record accrued revenues would result in financial statements that are understated. The answer is Option D: Understate revenues and overstate liabilities.
Explanation:When revenues for services provided have not been recorded or obtained, they are called accrued revenues. Accrued revenues are an instance of revenue recognition where revenue is recorded before payment is received.
Since the revenue has not been received, an adjusting entry is made to record accrued revenue. When the year-end adjusting entry to record accrued revenues is not made, it can cause financial statements to be misstated.
The consequence of not preparing a year-end adjusting entry to record accrued revenues is that the financial statements would be understated or incorrect.
This can happen in two ways: Revenues would be understated. Liabilities would be overstated.
Hence, option d. is correct.
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Through a comparable company analysis for Alibaba, you determined a P/E ratio of 6.0x is appropriate to value the company. Based on this metric, what is the implied Enterprise Value of Alibaba?
Answer:
hello your question is incomplete attached below is the complete question
answer : $ 1,391.692 ( first option )
Explanation:
Given P/E ratio = 6.0
Determine Implied Enterprise value
Implied Enterprise value = (EBITDA * P/E ratio ) + Net debt (cash )
where EBITDA = $205.663
P/E ratio = 6
Net debt = $157.714
hence Implied Enterprise value = (205.663 * 6)+ 157.714 ≈ $ 1,391.692
NOTE : all $ values are in millions
The implied Enterprise Value of Alibaba is $740,366
The calculation is as follows:Implied equity value = NTM earnings × P/E ratio
= $149,680 × 6.0
= $898,080
Now Implied enterprise value
= Implied equity value + Net debt
= $898,080 - $157,714
= $740,366
Therefore we can conclude that The implied Enterprise Value of Alibaba is $740,366
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Can anyone please help me A.S.A.P!!p
Answer:
I thinks it's c
Explanation:
Well Kelly is a costumer and a consumer is basically that and shes buying from a seller
Which of the following real estate investments were involves purchasing real estate and charging a monthly fee for use of your space
Answer:
when you flip you buy at a low price, fix it up then sell at a higher price for profit. usually in less than 6 months.
You are the new chief information officer for the video-game developer, necturus games. the company has recently undergone a major expansion of its primary product, and you must staff up the is department and determine the best way to develop new game "capsules" for the game, "escape velocity."
Answer:
Require a large-scale project manager.
Explanation:
It is the job of a chief information officer to ensure that all the project work is going on smoothly, if any work of the project is not going smoothly, then determine what kind of tasks are required for it.
As a chief information officer of Necturus games, we must ensure that a large scale project manager is required to maintain the project.
Due to the rapid development of game development, Necturus Games will require a large-scale project manager.
You like my koala his name is Fred
Answer:
i do like your koala
Explanation:
Buying and selling products online is called ____________. A. Information systems B. Browsing the web C. E-commerce D. E-mailing
Answer:
The answer is C. E-commerce
Explanation:
E-commerce refers to the process of buying or selling products or services over the Internet. So i believe this is the answer to the question.
Buying and selling products online is called E-commerce. Hence, option C is appropriate.
What is the meaning of E-Commerce?Online purchasing and selling of products and services is known as e-commerce. Affiliate marketing strategies are also a possible part of the definition of an e-commerce firm. To increase online sales, you can leverage e-commerce platforms like your own website, a well-known retailer like Amazon, or social media.
E-commerce is the electronic purchase or sale of goods through online stores or the Internet. E-commerce, often known as electronic commerce, is the exchange of goods and services as well as the sending of money and data through an electronic network, most commonly the Internet. These business dealings can be either B2B (business-to-business), B2C (business-to-consumer), C2C (consumer-to-consumer), or C2B.
Online purchasing and selling of products and services is known as e-commerce. Tactics are another component of the concept of an e-commerce business.
Hence, option C is correct.
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What’s the answer???
which of the following statements is true? a fixed cost structure has more risk of volatile changes in net income than a company with a variable cost structure.
The statement "a fixed cost structure has more risk of volatile changes in net income than a company with a variable cost structure" is not necessarily true in all cases.
The correct statement is" a fixed cost structure has less risk of volatile changes in net income than a company with a variable cost structure." The correct option is option d.
However the question is incomplete and cannot provide a complete or suitable answer or explanation . The probable question maybe :
which of the following statements is true?
a. a fixed cost structure has more risk of volatile changes in net income than a company with a variable cost structure.
b. a mixed cost structure (part fixed and part variable) has the risk of volatile change in net income.
c. the risk of volatile change in net income is not affected by a company's cost structure(fixed or variable).
d. a fixed cost structure has less risk of volatile changes in net income than a company with a variable cost structure.
And the answer to the above question is option d.
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do you have resources that will help you meet your needs
Answer:
yes
Explanation:
yes
Friday night is a good time to bring in the comments about me being tested for you and your team to make me want you and your team
A cost that is relevant to one decision may be irrelevant to a different decision. this statement is?
True. Depending on the decision being made, a cost may be important or irrelevant.
Sunk costs are expenses that have already been paid for and cannot be retrieved. The money was used. A sunk cost is one sort of irrelevant cost in accounting. A management solely takes into account relevant costs and disregards all other costs while considering a new project or investment.
Relevant costs are those that will be incurred regardless of whether a decision is taken when a management is considering a specific course of action, whereas irrelevant costs are those that will not be incurred. Sunk costs are not considerations for decision-making.
An expense could be important for one choice while being unimportant for another.
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____ is the process of gathering, storing, accessing, and analyzing data about a company in order to make better business decisions.
Every process that has to do with gathering, storing accessing and analyzing data for a company to make business decisions is referred to as: Business Intelligence.
The business world is faced with many vagaries such as risks and uncertainties. Every business intends to minimize cost and maximize profits. In order to do this, wise and better decisions must be made daily.
For business decisions to be made, predictive views, data mining, process analysis, descriptive analytics, and performance benching are all business intelligence entails.
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Companies pursuing a transnational strategy usually Multiple Choice
O locate most of their activities in developing countries
O have less decentralized manufacturing operations.
O have simple organizational structures and processes within and across regions.
O have international subsidiaries develop and share knowledge with company operations worldwide.
Companies pursuing a transnational strategy typically locate most of their activities in developing countries, have less decentralized manufacturing operations, and have simpler organizational structures and processes within and across regions.
A transnational strategy is one in which an organization operates in multiple countries and seeks to maximize profits through the coordination of activities across countries. Companies pursuing a transnational strategy usually locate most of their activities in developing countries because these countries offer lower costs of production, lower labor costs, and access to new markets.
These companies also typically have less decentralized manufacturing operations, allowing them to maintain more control over production processes, while also allowing them to better manage costs.
Transnational organizations tend to have simpler organizational structures and processes within and across regions. This allows them to make decisions and coordinate activities more quickly and efficiently. In addition, these organizations often have international subsidiaries that can develop and share knowledge with the company’s operations worldwide. This allows them to benefit from the expertise of staff in different countries, and helps them to develop more effective strategies for production and marketing.
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.One of the principles behind the concept of the circular flow is that _________.
A) In every economic exchange, the seller receives exactly the same amount that the buyer spends.
B) In every economic exchange, the seller receives less than the amount that the buyer spends.
C) The seller of goods receives exactly the same amount that the buyer spends, but the seller of resources receives less than the buyer spends.
D) In exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets the seller receives more than the buyer spends.
In exchange involving products, the seller receives less than the amount the buyer spends, but in resource markets, the seller receives more than the buyer spends. So, the correct answer is D)
The principle behind the concept of the circular flow is that there are two main types of markets in an economy: product markets and resource markets. In product markets, goods and services are exchanged between buyers and sellers, while in resource markets, the factors of production (such as labor, land, and capital) are bought and sold.
In product markets, the seller (producer or business) receives less than the amount the buyer (consumer) spends. This is because the seller needs to cover the costs of production, including expenses for raw materials, labor, and other inputs, as well as earn a profit. The seller's revenue from the sale of products is typically less than the total expenditure made by the buyer.
On the other hand, in resource markets, the seller (individuals or businesses that provide resources) receives more than the amount the buyer (producers or businesses) spends. This is because the resources are the inputs used in production, and their prices include not only the cost of the resource itself but also a return or payment to the owners of the resource for its use. The sellers of resources receive payments for the value of their resources, which may include wages, rent, interest, or profit.
In summary, the circular flow principle recognizes that in product markets, the seller receives less than the buyer spends, while in resource markets, the seller receives more than the buyer spends, reflecting the different dynamics of exchange in these two types of markets.
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The adjusted trial balance for Yondel Company at December 31, 2018 is presented below: Accounts Debit Credit Cash $ 8,000 Prepaid rent 23,000 Land 445,000 Accounts payable $ 12,000 Salaries payable 20,000 Common stock 230,000 Retained earnings 109,000 Dividends 14,000 Service revenue 340,000 Salaries expense 160,000 Rent expense 29,000 Utilities expense 32,000 Totals $ 711,000 $ 711,000 Prepare the closing entries for Yondel Company for the year ended December 31, 2018.
Answer:
Explanation:
Cash =8000
Prepaid rent = 23,000
Land = 445000
Accounts payable = 12,000
Salaries payable = 20,000
Retained earnings = 109,000
Dividends = 14,000
Service revenue = 340,000
Salaries expenses = 160,0000
Rent expenses = 29,000
Utilities expenses = 32,000
Net income = Service revenue - Salaries-Rent-Utilities-
=340,000-160,000-29,000-32,000 = 119,000
Journal
1. Debit Service revenue - 340,000
Credit income summary - 340,000
2, Debit Income summary - 221,000
Credit Salaries expenses 160,000
Credit Rent expenses 29,000
Credit Utilities expenses 32,000
3 Debit Income summary 119,000
Credit retained earnings 119,000
4 Debit retained earnings 14,000
Credit retained earnings 14,000
The Bedford Falls Bridge Building Company is considering the purchase of a new crane. George Bailey, the new manager, has had some past management experience while he was the chief financial officer of the local savings and loan. The cost of the crane is $17,291. 42, and the expected incremental cash flows are $5,000 at the end of year 1, $8,000 at the end of year 2, and $10,000 at the end of year 3. A. Calculate the net present value if the required rate of return is 9 percent. B. Calculate the internal rate of return. C. Should Mr. Bailey purchase this crane
A. To calculate the net present value (NPV) of the crane investment, we need to discount the expected cash flows at the required rate of return of 9 percent. The formula for NPV is as follows:
NPV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 - Initial cost
Where CF1, CF2, and CF3 are the cash flows expected at the end of year 1, year 2, and year 3, respectively, and r is the required rate of return.
Using the provided information, we can calculate the NPV as follows:
NPV = $5,000 / (1 + 0.09)^1 + $8,000 / (1 + 0.09)^2 + $10,000 / (1 + 0.09)^3 - $17,291.42
B. The internal rate of return (IRR) is the discount rate that makes the NPV of an investment equal to zero. We can calculate the IRR by finding the discount rate at which the sum of the present values of the cash flows equals the initial cost. This can be done using trial and error or financial software.
C. To determine whether Mr. Bailey should purchase the crane, we evaluate the NPV and compare it to zero. If the NPV is positive, it indicates that the investment is expected to generate a return higher than the required rate of return and is therefore favorable. If the NPV is negative, it indicates that the investment is expected to generate a return lower than the required rate of return and may not be advisable.
Without the actual cash flows for the subsequent years, it is not possible to calculate the precise NPV and IRR or make a definitive recommendation. However, based on the information provided, Mr. Bailey should calculate the NPV and IRR using the formulas and compare the results to determine if the investment in the crane is financially viable.
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You put $209 into an investment at 7% for four years. What will the balance be at the end of four years?
Answer:
$273.96
Explanation:
The balance will be the future value of $209, at 7% for four years.
The formula for calculating the future value is as below.
FV = PV × (1+r)^n
Where PV is the present value, $209
r= is the interest rate 7% or 0.07
n= 4 years
FV = $209 x ( 1+ 0.07) ^4
Fv =$209 x 1. 310
Fv = 273.9563
Fv= 273.96
Do you believe that his message on that aspect of life is sound, biblically speaking? Explain. Your answer should reflect careful thinking.
Answer:
Shakespeare's message on that aspect of life is sound biblically speaking.
Explanation:
Because the way he mad Hamlet become over the story gives you a perspective on how events and change can form a person, and make them become something that they never were before.
What ethical dilemmas do you think professionals in the marketing and advertising industry face? Explain.
Answer:
knowing how to play on emotions but also not make people feel like terrible human beings?
Explanation:
What type of advertising aims to spread a particular social message or to promote public welfare?
A.
corporate advertising
B.
retail advertising
C.
product advertising
D.
public service advertising
Answer:
D, Public service advertisements
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company: Year 1 Year 2 Year 3 Year 4 High price $ 27.43 $ 26.32 $ 30.42 $ 37.01 Low price 19.86 20.18 25.65 26.41 EPS 1.35 1.58 1.51 1.85 Earnings are projected to grow at 9 percent over the next year. a. What is your high target stock price over the next year
Answer:
High target price 38.8821
Low target price 29.6153
Explanation:
Calculation to determine your high and low target stock price over the next year
First step is to calculate the seperate yearly PE ratio for High and low price using this formula
PE ratio = Market price / EPS
EPS = B
Low = C
High = D
Let plug in the formula
Year 1
PE(High) C/B = $ 27.43/1.35
PE(High) C/B = 20.3185
PE(Low) D/B = 19.86/1.35
PE(Low) D/B = $14.7111
Year 2
PE(High) C/B = $ 26.32/1.58
PE(High) C/B = 16.6582
PE(Low) D/B = 20.18/1.58
PE(Low) D/B = 12.7722
Year 3
PE(High) C/B = $ 30.42/1.51
PE(High) C/B = 20.1457
PE(Low) D/B = 25.65/1.51
PE(Low) D/B = 16.9868
Year 4
PE(High) C/B = $ 37.01/1.85
PE(High) C/B = 20.0054
PE(Low) D/B = 26.41/1.85
PE(Low) D/B = 14.2757
Second step is to calculate the seperate Average PE for high and low price
Average PE
HIGH(20.3185+16.6582+20.1457+20.0054 / 4)
HIGH = 77.1278/4
HIGH=19.28195
LOW=($14.7111+12.7722+16.9868+14.2757/4)
LOW=58.7458/4
LOW=14.6865
(a) Now let calculate the high target stock price over the next year
Using this formula
High target price = Average PE(high) x EPS for next year
Let plug in the formula
High target price = 19.28195 x[(1+.09)×1.85]
High target price = 19.28195 x(1.09*1.85)
High target price = 19.28195*2.0165
High target price=38.8821
Therefore the high target stock price over the next year is 38.8821
(b) Calculation for the low target stock price over the next year
Using this formula
Low target price = Average PE(low) x EPS for next year
Let plug in the formula
Low target price = 14.6865 x [(1+.09)×1.85]
Low target price = 14.6865x(1.09*1.85)
Low target price = 14.6865×2.0165
Low target price = 29.6153
Therefore the low target stock price over the next year is 29.6153
TRUE / FALSE. "A normative theory explains how things should be and that is why
we avoid it in our economic analysis.
Normative theory is a type of economic analysis that describes how things should be. It is a statement of an opinion that explains the ideal or best solution to a problem rather than describing how things actually are. This type of analysis can be beneficial in economic analysis because it can provide a basis for evaluating whether current conditions meet the ideal conditions.
In economics, normative theory is an economic theory that describes how things should be rather than how they are. This can be contrasted with positive theory, which describes how things are. Normative theory is based on value judgments and opinions. It is a statement of how things should be, not how they are. It is used to provide a basis for evaluating whether current conditions meet the ideal conditions. Normative theory is not always avoided in economic analysis, but it can be problematic because it can create value judgments that are subjective. Instead, positive economic analysis is used to explain how things are and to predict how changes in economic conditions will affect economic variables. It is empirical and based on evidence.
The given statement is true that a normative theory explains how things should be and that is why we avoid it in our economic analysis.
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