Context: Normative economic statements are economic policy goals and values. There are two broad types: efficiency and equity. We considered dynamic efficiency (optimal rates of economic growth) in Activity 4. Here is a nice resource that elaborates on the idea of equity or economic justice In this exercise, we contrast these, thinking about trade-offs that might exist between the two. Consider the following equity or economic justice statement:

1. Macroeconomic policies that keep interest rates artificially low unfairly deny an adequate return to savings for middle and lower class families struggling to provide for their future.

And now consider the following efficiency statement:

2. Macroeconomic policies that keep interest rates low encourage efficient economic investment in ideas and capital goods that enhance our society's economic future.