The answer explains the difference between positive and normative statements in economics, providing an example to clarify the concept.
Positive statements in economics are based on facts and can be proven true or false through investigation, while normative statements involve value judgments and opinions that cannot be proven.
In the given example, the statement 'Prices rise when the government prints too much money' is a positive statement because it describes a cause and effect relationship based on economic principles and can be tested for accuracy.
On the other hand, normative statements like 'People in the United States should save more' express subjective opinions and values that cannot be empirically proven.
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