1.1.1 Economic Methodology — Practice Questions

Six original multiple-choice questions on economic methodology, written to the style and difficulty of AQA Paper 3 Section A. Answer them one at a time for instant feedback, or read straight through — every question carries a full worked model answer.

6 questions AQA A-Level Multiple choice Model answers included

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1. 1. Which one of the following is a positive economic statement?

   Definition in context

   Select one answer

   A A rise in the minimum wage would be fair to low-paid workers.

   B Inflation is too high and must be brought down.

   C The government ought to spend more on the health service.

   D Unemployment fell by 40,000 in the last quarter.
   Show model answer

   Answer: D (Unemployment fell by 40,000 in the last quarter.). A positive statement is one that can be tested against evidence and shown to be true or false. It describes what is, not what ought to be. Unemployment either fell by 40,000 last quarter or it did not, and the labour market statistics settle the question. Notice that a positive statement does not have to be correct — it only has to be testable.

   Why the other options are wrong

   • A — The word fair is a value judgement. Two economists could agree on exactly what a higher minimum wage does to employment and pay, and still disagree about whether the result is fair, because fairness cannot be settled by evidence.
   • B — Too high and must both express an opinion about what the rate of inflation should be. The current rate of inflation is a positive matter; the judgement that it is excessive is not.
   • C — Ought to is the clearest signal of a normative statement. It prescribes what the government should do rather than describing what it does or what would follow if it did.

2. 2. A government is considering a 10% tax on sugary drinks. Which one of the following statements about the tax is normative?

   Definition in context

   Select one answer

   A It would fall mainly on low-income households.

   B It would place an unfair burden on poorer households.

   C It would raise about £300 million in revenue each year.

   D It would reduce the quantity of sugary drinks consumed by 8%.
   Show model answer

   Answer: B (It would place an unfair burden on poorer households.). A normative statement expresses a value judgement and cannot be settled by evidence. Unfair is the giveaway: you could measure precisely how much of the tax poorer households pay and still disagree about whether that burden is unfair, because fairness is a matter of values rather than fact.

   Why the other options are wrong

   • A — This is the trap, because it sounds like a complaint. It is not. Who actually bears the burden of a tax is measurable — you compare what different income groups spend on sugary drinks — so this is a positive statement that happens to be about a distributional outcome.
   • C — A revenue forecast is a testable prediction. It may turn out to be wrong, but being wrong does not make a statement normative; only being untestable does.
   • D — This is a prediction about how consumers respond to a price change, which is exactly the sort of claim economists test with data. Statements about the future are still positive if evidence can eventually confirm or refute them.

3. 3. An economist states that a fall in the price of coffee will increase the quantity of coffee demanded, ceteris paribus. The purpose of the ceteris paribus assumption here is to

   Applied reasoning

   Select one answer

   A Allow the economist to ignore any evidence that contradicts the prediction.

   B Ensure the prediction holds true whatever else happens in the coffee market.

   C Hold other influences on demand constant, isolating the effect of price.

   D Show that price is the only factor that affects the demand for coffee.
   Show model answer

   Answer: C (Hold other influences on demand constant, isolating the effect of price.). Ceteris paribus means 'all other things being equal'. Economists cannot run controlled laboratory experiments on a whole market, so the assumption does that job on paper: it freezes incomes, tastes, the prices of substitutes and everything else, leaving a single cause and a single effect to examine. It is a device for isolating one relationship, not a claim about the real world.

   Why the other options are wrong

   • A — The assumption narrows a claim rather than protecting it. If incomes also changed, the prediction simply does not apply to that case — which is a limitation the economist has stated openly, not a way of dodging evidence.
   • B — This is the reverse of what the assumption does. Adding ceteris paribus means the prediction holds only when other things stay equal, so it makes the claim narrower, not universal.
   • D — Holding other factors constant is not the same as saying they do not exist. Incomes, tastes and substitute prices all affect the demand for coffee — the assumption sets them aside for the purpose of one piece of analysis.

4. 4. Economics is described as a social science because it

   Applied reasoning

   Select one answer

   A Analyses human behaviour with models and evidence, without controlling the variables.

   B Can be studied only through laboratory experiments conducted under controlled conditions.

   C Produces predictions that are always confirmed by later evidence.

   D Uses mathematics, which makes its conclusions as certain as those of physics.
   Show model answer

   Answer: A (Analyses human behaviour with models and evidence, without controlling the variables.). Economics is scientific in its method: it builds models, derives predictions from them and tests those predictions against data. It is a social science because its subject is human behaviour, which cannot be shut inside a laboratory. Millions of things change at once in a real economy, which is why assumptions such as ceteris paribus are needed to isolate one effect at a time.

   Why the other options are wrong

   • B — This describes a natural science, and it is precisely what economists cannot do with a national economy. Some behavioural work does use controlled experiments, but the discipline as a whole relies on observing economies that will not hold still.
   • C — No science guarantees this, and economics least of all. A prediction that could never be contradicted would not be testable, and a claim that cannot be tested is not scientific in the first place.
   • D — Mathematics makes reasoning precise and its steps checkable; it does not make the assumptions behind the model true. A model built on unrealistic assumptions produces unreliable conclusions however elegant the algebra.

5. 5. Table 1 shows three statements made during a debate about economic policy.
   Which one of the following correctly classifies all three statements?

   Data interpretation

   Table 1: Three statements made in an economic policy debate

   Statement	Claim
   1	The UK unemployment rate was 4.2% in 2024.
   2	Reducing unemployment matters more than reducing inflation.
   3	A one percentage point cut in interest rates would raise investment by 3%.

   Select one answer

   A 1 is normative, 2 is normative, 3 is positive.

   B 1 is positive, 2 is normative, 3 is normative.

   C 1 is positive, 2 is normative, 3 is positive.

   D 1 is positive, 2 is positive, 3 is normative.
   Show model answer

   Answer: C (1 is positive, 2 is normative, 3 is positive.). Take each in turn.
   Statement 1 is a published figure that can be checked, so it is positive.
   Statement 2 ranks one policy objective above another. Which of two objectives matters more depends on what you value, so it is normative.
   Statement 3 is a prediction about how investment responds to interest rates. It has not happened yet, but it could be tested against evidence, so it is positive.
   That gives positive, normative, positive.

   Why the other options are wrong

   • A — This misreads statement 1. A published unemployment rate is about as positive as a statement gets — it is a measured quantity, and anyone can look it up and check it.
   • B — This treats statement 3 as normative, most likely because it concerns the future and might turn out wrong. Being uncertain is not the same as being normative: what matters is whether evidence could in principle settle the claim, and here it could.
   • D — This treats statement 2 as positive. Matters more is a ranking of objectives, and no data set can establish that one objective deserves more weight than another — that is a value judgement.

6. 6. Two economists agree on all the available evidence about the effects of a carbon tax, but disagree about whether it should be introduced. The most likely explanation is that they

   Applied reasoning

   Select one answer

   A Are using different definitions of a carbon tax.

   B Have made an arithmetic error in one of their calculations.

   C Have tested the evidence using different economic models.

   D Hold different value judgements about the outcomes.
   Show model answer

   Answer: D (Hold different value judgements about the outcomes.). The stem does the work here: the two economists agree on all the available evidence. Every disagreement about facts has therefore been ruled out, and what remains is a disagreement about what those facts are worth. A carbon tax cuts emissions but raises the cost of heating a home. How to weigh a future environmental gain against a present cost to poorer households is a value judgement, and this is exactly why economists who agree on the positive analysis can still reach opposite policy conclusions.

   Why the other options are wrong

   • A — If they defined the tax differently they would not be examining the same policy, and they could not agree on the evidence about it. The stem says they do.
   • B — An arithmetic error would show up as a disagreement about the evidence itself. The stem rules that out — they agree on the numbers and disagree about what to do.
   • C — Different models generally produce different predictions, which again would be a disagreement about the evidence. Here the evidence is common ground and the disagreement is about what should follow from it.