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Chapter 1: Q 1.5 (page 1)

Distinguish between Normative and Positive Economics.

Short Answer

Expert verified

Positive economics makes use of facts and statements based on scientific analysis.

Normative Economics makes use of policies and judgments.

Step by step solution

01

Step 1. Definition of Normative and Positive Economics

Normative Economics deals with policies and their judgements whereas Positive Economics considers facts.

02

Step 2. Differences.

Positive economics considers statements and predictions. It means that if a condition is true in one country it will also be true in another country as well.

For example, India is the second-largest populated country.

Normative economics involves value judgments on certain economic policies and suggestions to control. It shows whether the statement is true or false or whether it is good or bad. It is a kind of critical analysis.

For example, If the price of gas rises, people will buy it less.

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