Question

What is Positive Economics ?

Hint:

To remember the difference, think: Positive economics is about what is Provably true (or false). Normative economics is about personal Notions or opinions.

Answer 1

Step 1: Understanding the Concept:
Positive economics is a stream of economic analysis that focuses on objective descriptions and predictions. It avoids value judgments or opinions about what should be done.

Step 2: Detailed Explanation:
\begin{itemize} \item Objective and Fact-Based: Positive economics deals with statements that are verifiable. For example, the statement "An increase in the price of petrol leads to a decrease in its quantity demanded" is a positive statement because it can be tested with real-world data. \item Cause-and-Effect Relationship: It seeks to explain how the economy works by establishing relationships between economic variables. \item Contrast with Normative Economics: It is distinct from normative economics, which deals with subjective opinions and value judgments about how the economy should be. Normative statements often include words like "ought," "should," or "fair." For instance, "The government should provide free healthcare to all citizens" is a normative statement. \end{itemize}