Question by  smoove42 (4)

What is the difference between positive and normative economics?


Answer by  RaeK (36)

Positive economics looks at how things actually are; e.g. the unemployment rate is over 9%. Normative economics looks at how things should be e.g. the unemployment rate should be lower.


Answer by  Roger70 (107)

Positive economics looks at economic reality looking at facts and not opinions. It relies on cause and effect that can be demonstrated. Normative economics looks at opinions or value judgments to consider how the world should operate. It works with hypothetical changes (eg the maximum tax rate should be reduced) and theorises likely effects.

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