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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.
A lobster catcher spends $12 500 per month to maintain a lobster boat. He plans to catch an average of 20 days per month during lobster season. For each day, he must allow approx
P and Y are both endogenous variables and according to the quantity theory of money we need P.Y = constant. If we divide both sides by P we get Y = constant / P. Because Y = Y D i
Discuss the problems of measuring productivity in actual work situations. Also how productivity might be measured for each of the following industries? Finance and insurance (examp
Differences between absolute advantage and comparative advantage? Ans) Absolute benefit and comparative benefit are two basic concepts to international trade. Under
Classify each of the following as employed, unemployed, or not in the labor force. a. Beth is not working; she applied for a job at Wal-Mart last week and is awaiting the result
Q. Characteristics of endogenous growth theory? There are many different explanations for technological progress. Most of them, though, have many common characteristics:
Suppose an advertising agency is conducting a survey concerning the effectiveness of commercials during the Super Bowl. If 32% of people watch the Super Bowl, and if the agency con
Buying government securities: When a commercial bank buys government bonds, the effect is substantially the same as that of lending - new money is created. To
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Derive the following equilibrium for the IS-LM model:
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