Normative economics is best described as:

• A. Describes how people should behave in the economy.
• B. Makes value judgments about policy.
• C. Describes the economy as it actually operates with fact-based statements.
• D. Proposes the best tax policy.

Answer: (C)

Normative economics centers on value judgments about what policies ought to be and what is desirable for society. It goes beyond describing data to argue what should be done, such as which policies to adopt based on ideas of fairness, efficiency, or welfare. This differs from positive economics, which seeks to describe how the economy actually works using facts and evidence. So the best way to summarize normative economics is that it makes value judgments about policy and what should be done, rather than merely stating what is.