positive economics and normative economics pdf

Key Differences Between Positive and Normative Economics Hence, the statements can neither be proven right nor wrong. It is also known as policy economics, as it takes into account individual opinions and preferences. Normative Economics suggests how the economy ought to operate. It incorporates subjective analyses and focuses on theoretical situations.

This branch of economics considers values and results in statements that state, ‘what should be the things’. The economics that uses value judgments, opinions, beliefs is called normative economics. In this way, they accept or reject the statements. It helps the policy makers to decide whether the proposed action, will be able to fulfill our objectives or not. Statements based on positive economics considers what’s actually occurring in the economy. When the scientific methods are applied to economic phenomena and scarcity related issues, it is positive economics.

Positive economics is alternatively known as pure economics or descriptive economics. It explains people about how the economy of the country operates. It analyses and explains the casual relationship between variables. Positive Economics is a branch of economics that has an objective approach, based on facts. It provides solution for the economic issue, based on value. Statements can be tested using scientific methods. Content: Positive Economics Vs Normative EconomicsĪ branch of economics based on data and facts is positive economics.Ī branch of economics based on values, opinions and judgement is normative economics. By, understanding the difference between positive and normative economics, you will learn about how the economy operates and to which extent the policy makers are taking correct decisions. Most of the people think that the statements which are commonly accepted are a fact but in reality, they are valued. Normative economics is value judgment based. While Positive economics is based on facts about the economy.

Positive economics and normative economics pdf