Positive and normative economics, Macroeconomics

Assignment Help:

POSITIVE AND NORMATIVE ECONOMICS


Economics as a social science adopts an analytical approach to the study of changes in economic variables on the actions of human beings. The scientific approach to the analysis of economic events, commonly referred to as positive economics, concerns itself with statements that are capable of verification by reference to the facts. For instance, "If the price of cloth is higher, people will buy less" or, "As the money in the economy increases, the price level will go up". We can statistically estimate the relationship between cloth prices and sales or between the money supply and general price level. In principle all positive statements should be reducible to some form which is testable by reference to empirical evidence. As a doctrine, the advocates of this part of economic science, would argue that economic science does not and should not encompass statements that involve value judgements, i.e. statements of the form 'x is good or bad'. According to them, such would be the province of normative economics and that economists cannot make any statements involving value judgements.


Normative economics involves prescriptions or statements about "what ought to be", rather than "what is". It involves the advocacy of specific policy prescriptions, because it uses ethical judgements as well as knowledge of positive economics. Contrary to positive economic statements, normative economic statements cannot be tested before they are accepted or rejected. Normative economics gives rise to statements such as "corporate sector should not maximize profits", or "monopolies should be regulated". This type of economics may be contrasted with positive economics which is concerned with describing and analyzing the economic phenomenon as it is.

 


Related Discussions:- Positive and normative economics

Advantage and disadvantage of outsourcing, What are the pros and cons of ou...

What are the pros and cons of outsourcing in order to keep prices down?

Solow growth model, graph the central equation of the solow model. argue th...

graph the central equation of the solow model. argue that a steady state exists and that the economy will converge to this point from any initial starting capital stock

Unemployment, Why do we still have problem of "unemployment" ? How could we...

Why do we still have problem of "unemployment" ? How could we solve the problem? Which one is better fixed or flexible exchange rate of unemployment ?

Energy infrastructure, Energy Infrastructure: Electricity is one of th...

Energy Infrastructure: Electricity is one of the main determinants of the quality of life. In India, the power sector has not kept pace with the growth in demand resulting in

Determination of price level, P and Y are both endogenous variables and acc...

P and Y are both endogenous variables and according to the quantity theory of money we need P.Y = constant. If we divide both sides by P we get Y = constant / P. Because Y = Y D i

Explain the time constant of the circuit, A coil of inductance 0.04H and re...

A coil of inductance 0.04H and resistance 10Ω is linked to a 120V, d.c. supply. Determine (a) The ?nal value of current, (b) The time constant of the circuit, (c) The va

Money supply and monetary policy, Money Supply and Monetary Policy   All...

Money Supply and Monetary Policy   All modern societies use money as the medium of exchange. Since money can be exchanged for goods and services it also becomes a financial asse

Fiscal, what is the supply side

what is the supply side

Multipliers, what is difference b/w dynamic and static multiplier

what is difference b/w dynamic and static multiplier

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd