POSITIVE AND NORMATIVE ECONOMIC STATEMENTS

What is a positive economic statement?

A positive economic statement is an objective statement that can be tested, measured, or proven true or false using evidence.

What is a key feature of positive economic statements?

They are factual and free from value judgements.

Give an example of a positive economic statement.

An increase in interest rates will reduce consumer spending.

Why are positive statements important in economics?

They help explain and predict economic behaviour based on evidence.

What is a normative economic statement?

A normative economic statement is a subjective statement based on opinions or value judgements and cannot be tested.

What is a key feature of normative economic statements?

They express views about what ought to happen.

Give an example of a normative economic statement.

The government should increase the minimum wage.

How can normative statements often be identified?

They often include words like “should,” “ought,” or “fair.”

What is the main distinction between positive and normative statements?

Positive statements are objective and testable, while normative statements are subjective and based on value judgements.

Why is it important to distinguish between positive and normative statements?

Because policy decisions should be based on factual evidence as well as ethical considerations.

What is a value judgement?

A value judgement is a belief or opinion about what is desirable or acceptable.

Why are value judgements important in economics?

They influence decisions about economic policies and priorities.

Give an example of a value judgement in economics.

Reducing income inequality is more important than economic growth.

How do value judgements influence government economic policy?

They shape objectives such as fairness, efficiency, or equality.

Why might different economists recommend different policies?

Because they may hold different value judgements.

How do value judgements affect economic decision making?

They influence choices made by governments, firms, and individuals.

Why are normative statements common in economic policy debates?

Because policies involve ethical considerations and trade-offs.

Can normative statements be supported by positive analysis?

Yes, but they cannot be proven true or false.

How does positive economics contribute to policy making?

It provides evidence on the likely outcomes of different policies.

Why can economic policy not rely solely on positive statements?

Because policy decisions also require ethical and social considerations.

How might value judgements affect taxation policy?

A belief in equality may lead to support for progressive taxation.

How do value judgements influence decisions on welfare spending?

They affect views on how much support the government should provide.

Why is it important for economists to separate positive and normative analysis?

To ensure clarity between evidence-based conclusions and personal opinions.

How can value judgements lead to conflict in economic policy?

Because different groups have different views on fairness and efficiency.