Positive and normative economics, Macroeconomics

Assignment Help:

POSITIVE AND NORMATIVE ECONOMICS


Economics as a social science adopts an analytical approach to the study of changes in economic variables on the actions of human beings. The scientific approach to the analysis of economic events, commonly referred to as positive economics, concerns itself with statements that are capable of verification by reference to the facts. For instance, "If the price of cloth is higher, people will buy less" or, "As the money in the economy increases, the price level will go up". We can statistically estimate the relationship between cloth prices and sales or between the money supply and general price level. In principle all positive statements should be reducible to some form which is testable by reference to empirical evidence. As a doctrine, the advocates of this part of economic science, would argue that economic science does not and should not encompass statements that involve value judgements, i.e. statements of the form 'x is good or bad'. According to them, such would be the province of normative economics and that economists cannot make any statements involving value judgements.


Normative economics involves prescriptions or statements about "what ought to be", rather than "what is". It involves the advocacy of specific policy prescriptions, because it uses ethical judgements as well as knowledge of positive economics. Contrary to positive economic statements, normative economic statements cannot be tested before they are accepted or rejected. Normative economics gives rise to statements such as "corporate sector should not maximize profits", or "monopolies should be regulated". This type of economics may be contrasted with positive economics which is concerned with describing and analyzing the economic phenomenon as it is.

 


Related Discussions:- Positive and normative economics

Manufactures artificial trees and flowers, Face Tree manufactures artificia...

Face Tree manufactures artificial trees and flowers. There are about 100 workers who do the routine assembly work for pay ranging from $8 per hour to $15 per hour. They work in two

What is is-lm model with inflation, Q. What is IS-LM model with inflation? ...

Q. What is IS-LM model with inflation? The IS-LM model with inflation  The basic assumption We developed IS-LM model with constant wages and prices. We can now exten

Calculate rental price of capital, Let the real interest rate, i r , equal ...

Let the real interest rate, i r , equal 5 percent and the rate of depreciation, d, equal 10 percent.  In this case, if the price of a piece of capital is P K = $10,000, what is th

Change in the dependent variable, All other things being held constant, wha...

All other things being held constant, what is the change in the dependent variable for a unit change in the first independent variable for the multiple regression equation: ? = 5.2

Unions, Are unions “harmful monopolies” or "necessary?" compare and contras...

Are unions “harmful monopolies” or "necessary?" compare and contrast the schools of thought that subscribe and their point of views?

Firm''s total revenues, How much will your firm's total revenues (revenues ...

How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?

Net Exports and the price level, Ok... So if the price level is rising, th...

Ok... So if the price level is rising, this means that inflation is rising as well, so the value of the dollar in the US would decrease meaning that purchasing power decreases as

Labor is continuously compounded, Function given: Qt=A0Lt^6Kt^4, Lt=L0e^.03...

Function given: Qt=A0Lt^6Kt^4, Lt=L0e^.03t, Kt=K0e^.02t 1. Growth of labor is continuously compounded at 3% 2. Growth of Capital is continuously compounded at 2% Solve:

Explain the facts or economics rate, Explain the facts or economics rate ...

Explain the facts or economics rate Boom: The period leading up to the peak of the cycle when an overheating economy is experiencing high GDP growth and inflationary pressures

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd