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Positive economics (sometimes called Descriptive Economics) is the study of economic reality and why theeconomy operates as it does. It is biased purely on facts rather than opinions. This type of economics is made upof positive statements which can be accepted or rejected through applying the scientific method. "Americans

bought five million CDs last year" is a positive statement - a simple declaration of fact.

Normative economics (also called Policy Economics) deals with how the world ought to be. In this type ofeconomics, opinions or value judgments - known as normative statements - are common. "We should reducetaxes" is an example of a normative statement.

Please provide 12+ examples of Normative Economics and 12+ examples of PositiveEconomics ?

The definition of Positive Economics, it is about 'how the economy works'. Positive is supposed to be 'based on fact', yetit still can be debated. Normative Economics is what it 'ought to be', someone's opinion, based on 'value judgement.' Itis of course, debatable, also. Which one is more commonly debated between economists ? Why? Also, isn't it true thatany Normative statement or question is based on a Positive statement or question ? In other words, to have normative,

you must have a positive in order to have a value-based judgement to begin with ? Please give me some hard examples,12 + of each - I'm not 100% test ready on this concept, but my professor will be! I understand the easy ones, but I'mafraid the exam will be much harder. The more difficult the examples the better. This professor is very hard andthorough. He tests on application and comprehension, not just definitions, terms and concepts.

Best Answer

Positive economics can be described as “what is, what was, and what probably will be” e conomics. Statements arebased on economic theory rather than raw emotion. Often these statements will be expressed in the form of ahypothesis that can be analysed and evaluated.

Examples:

A rise in interest rates will cause a rise in the exchange rate and an increase in the demand for imported productsLower taxes may stimulate an increase in the active labour supplyA national minimum wage is likely to cause a contraction in the demand for low-skilled labourThe UK economy now has lower unemployment than GermanyThe American stock market has boomed in recent yearsNORMATIVE STATEMENTS

Normative statements are subjective - based on opinion only - often without a basis in fact or theory. They are value-laden, emotional statements that focus on "what ought to be".

It is important to be able to distinguish between these types of statements - particularly when heated arguments anddebates are taking place. Most economists tend to adopt a positive approach.

Examples:

The decision to grant independence for the Bank of England is unwise and should be reversedA national minimum wage is totally undesirable as it does not help the poor and causes higher unemployment and

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inflationThe national minimum wage should be increased to £5 as a method of reducing povertyProtectionism is the only proper way to improve the living standards of workers whose jobs are threatened by cheap

imports

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The importance of detecting bias in arguments

Whenever you are reading articles on current affairs it is important to be able to distinguish between objective and subjective statements .

Often, the person writing an article has a particular argument to make and will include subjective statements about what ought to be or what should be happening. Their articles carry value judgements ; they are trying to

persuade you of the particular merits or demerits of a policy decision. These articles may be wholly or partiallylacking in objectivity.

Positive Statements

Positive statements are objective statements that can be tested, amended or rejected by referring to theavailable evidence . Positive economics deals with objective explanation and the testing and rejection oftheories. For example:

A fall in incomes will lead to a rise in demand for own-label supermarket foods If the government raises the tax on beer, this will lead to a fall in profits of the brewers. The rising price of crude oil on world markets will lead to an increase in cycling to work A reduction in income tax will improve the incentives of the unemployed to find work. A rise in average temperatures will increase the demand for sun screen products. Higher interest rates will reduce house prices

Cut-price alcohol has increased the demand for alcohol among teenagers A car scrappage scheme will lead to fall in the price of second hand cars

A value judgement is a subjective statement of opinion rather than a fact that can be tested by looking at theavailable evidence

Normative Statements

Normative statements are subjective statements rather than objective statements – i.e. they carry value judgments . For example:

Pollution is the most serious economic problem Unemployment is more harmful than inflation

The congestion charge for drivers of petrol-guzzling cars should increase to £25 The government should increase the minimum wage to £6 per hour to reduce poverty. The government is right to introduce a ban on smoking in public places . The retirement age should be raised to 70 to combat the effects of our ageing population. Resources are best allocated by allowing the market mechanism to work freely The government should enforce minimum prices for beers and lagers sold in supermarkets and off-

licences in a bid to control alcohol consumption

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statement, they cannot be logically inferred from the objective information provided. (In other words, they don'thave to be true given that the unemployment rate is at 9 percent.)

……..Positive and normative economic thought are two specific branches of economic reasoning. Althoughthey are associated with one another, positive and normative economic thought have different focuses whenanalyzing economic scenarios.

Positive Economics

Positive economics is a branch of economics that focuses on the description and explanation of phenomena, aswell as their casual relationships. It focuses primarily on facts and cause-and-effect behavioral relationships,including developing and testing economic theories. As a science, positive economics focuses on analyzingeconomic behavior. It avoids economic value judgments. For example, positive economic theory woulddescribe how money supply growth impacts inflation , but it does not provide any guidance on what policyshould be followed. "The unemployment rate in France is higher than that in the United States" is a positiveeconomic statement. It gives an overview of an economic situation without providing any guidance fornecessary actions to address the issue.

Normative Economics Normative economics is a branch of economics that expresses value or normative judgments about economicfairness. It focuses on what the outcome of the economy or goals of public policy should be. Many normative

judgments are conditional. They are given up if facts or knowledge of facts change. In this instance, a change invalues is seen as being purely scientific. Welfare economist Amartya Sen explained that basic (normative)

judgments rely on knowledge of facts.

An example of a normative economic statement is "The price of milk should be $6 a gallon to give dairyfarmers a higher living standard and to save the family farm. " It is a normative statement because it reflectsvalue judgments. It states facts, but also explains what should be done. Normative economics has subfields that

provide further scientific study including social choice theory, cooperative game theory , and mechanism design.

Relationship Between Positive and Normative Economics

Positive economics does impact normative economics because it ranks economic policies or outcomes based onacceptability (normative economics). Positive economics is defined as the "what is" of economics, whilenormative economics focuses on the "what ought to be. " Positive economics is utilized as a practical tool forachieving normative objectives. In other words, positive economics clearly states an economic issue andnormative economics provides the value-based solution for the issue .

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positive and normative economics

You will often hear statements about economic issues on the television and written in newspapers andmagazines. These statements can be divided into two main groups - positive and normative .

POSITIVE STATEMENTS

Positive statements are objective statements dealing with matters of fact or they question about how thingsactually are. Positive statements are made without obvious value-judgements and emotions. They may suggestan economic relationship that can be tested by recourse to the available evidence.

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Positive economics can be described as “what is, what was, and what probably will be” economics. Statementsare based on economic theory rather than raw emotion. Often these statements will be expressed in the form of ahypothesis that can be analysed and evaluated.

Examples:

A rise in interest rates will cause a rise in the exchange rate and an increase in the demand for importedproducts

Lower taxes may stimulate an increase in the active labour supply A national minimum wage is likely to cause a contraction in the demand for low-skilled labour The UK economy now has lower unemployment than Germany The American stock market has boomed in recent years

NORMATIVE STATEMENTS

Normative statements are subjective - based on opinion only - often without a basis in fact or theory. They arevalue-laden, emotional statements that focus on "what ought to be".

It is important to be able to distinguish between these types of statements - particularly when heated arguments

and debates are taking place. Most economists tend to adopt a positive approach.

Examples:

The decision to grant independence for the Bank of England is unwise and should be reversed A national minimum wage is totally undesirable as it does not help the poor and causes higher unemployment

and inflation The national minimum wage should be increased to 5 as a method of reducing poverty Protectionism is the only proper way to improve the living standards of workers whose jobs are threatened by

cheap imports