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

Market for a particular type of computer memory chip, 1. Consider the marke...

1. Consider the market for a particular type of computer memory chip. Would you expect the long-run (own-price) elasticity of supply to be larger or smaller than the short-run elas

Particular group of mutual funds, Suppose the returns of a particular group...

Suppose the returns of a particular group of mutual funds are normally distributed with a mean of 9.1% and a standard deviation of 5.1%. If the manager of a particular fund wants h

Poisson distribution, In a Poisson distribution U=4. A) What is the probabi...

In a Poisson distribution U=4. A) What is the probability that X=2? B) What is the probability that X is 2?

Trade liberalisation under wto, TRADE LIBERALISATION UNDER WTO: In  th...

TRADE LIBERALISATION UNDER WTO: In  the Uruguay Round negotiations, India agreed to reduce tariff on a  large number of  commodities and  remove quantitative restrictions (QRs

To compare prices what is consumers ability, How has the Internet revolutio...

How has the Internet revolution affected the workings of businesses, consumers, and government in a free market economy? Specifically, how has Internet affected businesses' ability

Farmer grows wheat and sells, A farmer grows wheat and sells it to a miller...

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre

Outline two main restrictions by indian government applied t, outline two m...

outline two main restrictions by indian government applied to import. Using the data from your case study analyse and explain who would benefit directly and who would lose directly

Elasticity of supply, The supply equation for widgets is P = 100 + 10QS. Th...

The supply equation for widgets is P = 100 + 10QS. The elasticity of supply between quantity supplied of 9 and 11?

Describe the economic justification for free trade policies, Some manufactu...

Some manufacturing and agricultural products produced in the Midwest are exported to overseas markets.  US consumers and businesses also purchase many products produced outside the

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