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Positive vs. Normative Economics Explained

The document distinguishes between positive statements, which are factual, and normative statements, which express opinions or what should be. It discusses examples of both types of statements in economics, explaining how economists use assumptions and models to simplify complex behaviors and understand market trends. Additionally, it categorizes various statements as either micro or macroeconomic in nature.

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megan.lupton
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17 views1 page

Positive vs. Normative Economics Explained

The document distinguishes between positive statements, which are factual, and normative statements, which express opinions or what should be. It discusses examples of both types of statements in economics, explaining how economists use assumptions and models to simplify complex behaviors and understand market trends. Additionally, it categorizes various statements as either micro or macroeconomic in nature.

Uploaded by

megan.lupton
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1.​ A positive statement is the truth, and a normative statement is what should be the truth.

A positive example is sugar tax discourages people from drinking soda. A normative
example is people should drink less soda.
2.​ Positive or normative and why
a.​ Normative. The key word is “should” because it is not a fact, it is just an opinion
of someone who thinks the Federal Reserve should reduce the rate of money
growth.
b.​ Normative. The key word in this statement is “ought.” Once again, the statement
just says that society should require welfare recipients to work for jobs.
c.​ Positive. This statement is factual, as it does not have words like “should” or
“ought” in the sentence. It specifically states a fact that is true.
d.​ Positive. Once again, this statement gives a true fact because lower tax rates
would indeed encourage more work which would lead to more saving.
3.​ Economics is a social science because economists study and collect data on other’s
behavior. They also work similarly to physicists and mathematicians by using their data
to create, confirm, or deny theories.
4.​ Economists make assumptions to help them easier understand the world by simplifying
the complex aspects. One example of this might be to assume a market has two
producers selling one good. This could help us to better study market trends before
applying them to a large market.
5.​ In economics, models and diagrams allow economists to understand the most important
details without the distraction of more minor details. They can also help visual learners,
like myself, to better understand certain concepts rather than having to read about them.
6.​ Micro or macro
a.​ Macro
b.​ Micro
c.​ Micro
d.​ Macro
e.​ Macro

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