Question

Explain the difference between positive and normative economics. Then, go online and find three economic facts. State each facts positively and then state each one of them normatively.

Answer 1

Normative statement

The statement which is subjective and based on value judgements and assumptions. Providing any view, opinion or recommendations can be a normative statement.

For example,

1. The government should use fiscal policy to reduce wealth inequality.

2. Rise in income can only increase consumers standard of living.

3. Recession is worst for economy job market.

Positive statement

Positive statement is based on facts and figures which can be tested and verified with given evidence. These are objective statements. These statement are not based on assumptions but rather on facts and data.

For example

1. The government increased taxes on rich people to reduce wealth inequality.

2. Demand for cars will only rise when the income of the consumers will rise.

3. Unemployment will rise if the economy went in recession.