Positive & Normative Economics

Positive & Normative Economics

What are the two branches of economic reasoning?

Positive Economics

Identify the type of economic reasoning

• deals with what is

• logic & evidences that can be tested

• mechanism of economy

• refers to the facts of an economy

• also targets to elaborate as to how society makes decisions about economic activities such as production, distribution, consumption, spending, and trade

• focuses on looking at the lenses wherein objectivity, scientific explanation, logical, empirical, and factual are the primal considerations

Normative Economics

Identify the type of economic reasoning

• deals with what should be / what ought to be

• Value judgement that can’t be tested

• focuses on value judgment and opinion

• what we people perceived as correct and true includes subjectivity in every line of reasoning

descriptive; describe

Positive statements are ________.

Claims that attempt to _______ the world as it is.

prescriptive; prescribe

Normative statements are _______.

Claims that attempt to _______ how the world should be.

formulate policies

Positive & normative economics reasoning are used to _______.

normative; positive

In the realm of politics, a _______ statement is applied by the politicians to gain and acquire favor from the people rather than just using the _______ statement.