Positive economics (sometimes called Descriptive Economics) is the study of economic reality and why the

economy operates as it does. It is biased purely on facts rather than opinions. This type of economics is made up
of positive statements which can be accepted or rejected through applying the scientific method. "Americans
bought five million CDs last year" is a positive statement - a simple declaration of fact.

Normative economics (also called Policy Economics) deals with how the world ought to be. In this type of
economics, opinions or value judgments - known as normative statements - are common. "We should reduce
taxes" is an example of a normative statement.
Please provide 12+ examples of Normative Economics and 12+ examples of Positive
Economics ?

The definition of Positive Economics, it is about 'how the economy works'. Positive is supposed to be 'based on fact', yet
it still can be debated. Normative Economics is what it 'ought to be', someone's opinion, based on 'value judgement.' It
is of course, debatable, also. Which one is more commonly debated between economists ? Why? Also, isn't it true that
any Normative statement or question is based on a Positive statement or question ? In other words, to have normative,
you must have a positive in order to have a value-based judgement to begin with ? Please give me some hard examples,
12 + of each - I'm not 100% test ready on this concept, but my professor will be! I understand the easy ones, but I'm
afraid the exam will be much harder. The more difficult the examples the better. This professor is very hard and
thorough. He tests on application and comprehension, not just definitions, terms and concepts.
Best Answer
Positive economics can be described as what is, what was, and what probably will be economics. Statements are
based on economic theory rather than raw emotion. Often these statements will be expressed in the form of a
hypothesis that can be analysed and evaluated.

Examples:

A rise in interest rates will cause a rise in the exchange rate and an increase in the demand for imported products
Lower taxes may stimulate an increase in the active labour supply
A national minimum wage is likely to cause a contraction in the demand for low-skilled labour
The UK economy now has lower unemployment than Germany
The American stock market has boomed in recent years
NORMATIVE STATEMENTS

Normative statements are subjective - based on opinion only - often without a basis in fact or theory. They are value-
laden, emotional statements that focus on "what ought to be".

It is important to be able to distinguish between these types of statements - particularly when heated arguments and
debates are taking place. Most economists tend to adopt a positive approach.

Examples:

The decision to grant independence for the Bank of England is unwise and should be reversed
A national minimum wage is totally undesirable as it does not help the poor and causes higher unemployment and
inflation
The national minimum wage should be increased to 5 as a method of reducing poverty
Protectionism is the only proper way to improve the living standards of workers whose jobs are threatened by cheap
imports

..
The importance of detecting bias in arguments
Whenever you are reading articles on current affairs it is important to be able to distinguish between objective
and subjective statements.
Often, the person writing an article has a particular argument to make and will include subjective statements
about what ought to be or what should be happening. Their articles carry value judgements; they are trying to
persuade you of the particular merits or demerits of a policy decision. These articles may be wholly or partially
lacking in objectivity.
Positive Statements
Positive statements are objective statements that can be tested, amended or rejected by referring to the
available evidence. Positive economics deals with objective explanation and the testing and rejection of
theories. For example:
A fall in incomes will lead to a rise in demand for own-label supermarket foods
If the government raises the tax on beer, this will lead to a fall in profits of the brewers.
The rising price of crude oil on world markets will lead to an increase in cycling to work
A reduction in income tax will improve the incentives of the unemployed to find work.
A rise in average temperatures will increase the demand for sun screen products.
Higher interest rates will reduce house prices
Cut-price alcohol has increased the demand for alcohol among teenagers
A car scrappage scheme will lead to fall in the price of second hand cars
A value judgement is a subjective statement of opinion rather than a fact that can be tested by looking at the
available evidence
Normative Statements
Normative statements are subjective statements rather than objective statements i.e. they carry value
judgments. For example:
Pollution is the most serious economic problem
Unemployment is more harmful than inflation
The congestion charge for drivers of petrol-guzzling cars should increase to 25
The government should increase the minimum wage to 6 per hour to reduce poverty.
The government is right to introduce a ban on smoking in public places.
The retirement age should be raised to 70 to combat the effects of our ageing population.
Resources are best allocated by allowing the market mechanism to work freely
The government should enforce minimum prices for beers and lagers sold in supermarkets and off-
licences in a bid to control alcohol consumption
Focusing on the evidence is called adopting an empirical approach evidence-based work is becoming more
and more important in shaping different government policies and how much funding to give to each.
Positive economics is objective and fact based, while normative economics is subjective and value based. Positive
economic statements do not have to be correct, but they must be able to be tested and proved or disproved. Normative
economic statements are opinion based, so they cannot be proved or disproved.

While this distinction seems simple, it is not always easy to differentiate between the positive and the normative. Many
widely-accepted statements that people hold as fact are actually value based.

For example, the statement, "government should provide basic healthcare to all citizens" is a normative economic
statement. There is no way to prove whether government "should" provide healthcare; this statement is based on
opinions about the role of government in individuals' lives, the importance of healthcare and who should pay for it.

The statement, "government-provided healthcare increases public expenditures" is a positive economic statement,
because it can be proved or disproved by examining healthcare spending data in countries like Canada and Britain where
the government provides healthcare.
.
Positive Analysis
Descriptive, factual statements about the world are referred to as positive statements by economists. The term
"positive" isn't used to imply that economists always convey good news, of course, and economists often make
very, well, negative positive statements. Positive analysis, accordingly, uses scientific principles to arrive at
objective, testable conclusions.
Normative Analysis
On the other hand, economists refer to prescriptive, value-based statements as normative statements. Normative
statements usually use factual evidence as support, but they are not by themselves factual. Instead, they
incorporate the opinions and underlying morals and standards of those people making the statements.
Normative analysis refers to the process of making recommendations about what action should be taken or
taking a particular viewpoint on a topic.
Examples of Positive vs. Normative
The distinction between positive and normative statements is easily shows via examples. The statement
The unemployment rate is currently at 9 percent.
is a positive statement, since it conveys factual, testable information about the world. Statements such as
The unemployment rate is too high.
The government must take action in order to reduce the unemployment rate.
are normative statements, since they include value judgments and are of a prescriptive nature. It's important to
understand that, despite the fact that the two normative statements above are intuitively related to the positive
statement, they cannot be logically inferred from the objective information provided. (In other words, they don't
have to be true given that the unemployment rate is at 9 percent.)
..Positive and normative economic thought are two specific branches of economic reasoning. Although
they are associated with one another, positive and normative economic thought have different focuses when
analyzing economic scenarios.
Positive Economics
Positive economics is a branch of economics that focuses on the description and explanation of phenomena, as
well as their casual relationships. It focuses primarily on facts and cause-and-effect behavioral relationships,
including developing and testing economic theories. As a science, positive economics focuses on analyzing
economic behavior. It avoids economic value judgments. For example, positive economic theory would
describe how money supply growth impacts inflation, but it does not provide any guidance on what policy
should be followed. "The unemployment rate in France is higher than that in the United States" is a positive
economic statement. It gives an overview of an economic situation without providing any guidance for
necessary actions to address the issue.
Normative Economics
Normative economics is a branch of economics that expresses value or normative judgments about economic
fairness. It focuses on what the outcome of the economy or goals of public policy should be. Many normative
judgments are conditional. They are given up if facts or knowledge of facts change. In this instance, a change in
values is seen as being purely scientific. Welfare economist Amartya Sen explained that basic (normative)
judgments rely on knowledge of facts.
An example of a normative economic statement is "The price of milk should be $6 a gallon to give dairy
farmers a higher living standard and to save the family farm. " It is a normative statement because it reflects
value judgments. It states facts, but also explains what should be done. Normative economics has subfields that
provide further scientific study including social choice theory, cooperative game theory, and mechanism design.
Relationship Between Positive and Normative Economics
Positive economics does impact normative economics because it ranks economic policies or outcomes based on
acceptability (normative economics). Positive economics is defined as the "what is" of economics, while
normative economics focuses on the "what ought to be. " Positive economics is utilized as a practical tool for
achieving normative objectives. In other words, positive economics clearly states an economic issue and
normative economics provides the value-based solution for the issue .
..
positive and normative economics
You will often hear statements about economic issues on the television and written in newspapers and
magazines. These statements can be divided into two main groups - positive and normative.
POSITIVE STATEMENTS
Positive statements are objective statements dealing with matters of fact or they question about how things
actually are. Positive statements are made without obvious value-judgements and emotions. They may suggest
an economic relationship that can be tested by recourse to the available evidence.
Positive economics can be described as what is, what was, and what probably will be economics. Statements
are based on economic theory rather than raw emotion. Often these statements will be expressed in the form of a
hypothesis that can be analysed and evaluated.
Examples:
A rise in interest rates will cause a rise in the exchange rate and an increase in the demand for imported
products
Lower taxes may stimulate an increase in the active labour supply
A national minimum wage is likely to cause a contraction in the demand for low-skilled labour
The UK economy now has lower unemployment than Germany
The American stock market has boomed in recent years
NORMATIVE STATEMENTS
Normative statements are subjective - based on opinion only - often without a basis in fact or theory. They are
value-laden, emotional statements that focus on "what ought to be".
It is important to be able to distinguish between these types of statements - particularly when heated arguments
and debates are taking place. Most economists tend to adopt a positive approach.
Examples:
The decision to grant independence for the Bank of England is unwise and should be reversed
A national minimum wage is totally undesirable as it does not help the poor and causes higher unemployment
and inflation
The national minimum wage should be increased to 5 as a method of reducing poverty
Protectionism is the only proper way to improve the living standards of workers whose jobs are threatened by
cheap imports