Positive Economics vs Normative Economics

Topics: Economics, Minimum wage, Unemployment Pages: 4 (853 words) Published: September 6, 2013
|Definition of 'Positive Economics' | |The study of economics based on objective analysis. Most economists today focus on positive economic analysis, which uses what is and what has been occurring in | |an economy as the basis for any statements about the future. Positive economics stands in contrast to normative economics, which uses value judgments. | |Investopedia explains 'Positive Economics' | | |For example, a positive economic statement would be: "Increasing the interest rate will encourage people to save." This is considered a positive economic | | |statement because it does not contain value judgments and its accuracy can be tested. | | | | | |Most of the information we hear in the media today is a combination of positive and normative economic statements or theories. Because of this, investors should | | |always be careful to separate out what is objective and what is subjective analysis....
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