Positive and Normative Economics| Microeconomics Quiz |MCQs| Management Notes
Positive and Normative Economics: We all know that the term economics is defined as a social science. There has been a discussion about this term whether it is called a normative science or a positive science. But the debate ended with the conclusion that it is both positive and normative science. Economics not only tells us about the happening of certain things but also says whether it is the right thing to happen or not.
Positive Economics: If we consider economics as a positive science then it means that the term economics can be only used for describing as positive science only describes the things. Positive science only explains things as they happen in reality. It generally explains what is, what was, and what will be. Therefore we can consider economics as a positive science as it describes the cause and effect relationship between various economic phenomena.
For example, the cause and effect relationship between price and demand of a commodity can be explained by the law of demand.
Normative Economics: We cannot separate the term economics from the normative aspect because it is the kind of duty of many economists to have a careful study of various economic problems along with suggesting the different ways to solve those problems. Normative Science studies things as they should be which is related to the criteria of’ what ought to be’.
Positive and Normative Economics
Which of the following is a positive economic statement?
A) Government programs to help the poor are just making problems worse.
B) One in every five children in the United States is living in poverty.
C) Increases in poverty rates signify a deterioration of the U.S. economy.
D) The number of families living in poverty in the United States is high.
The correct answer for the given question is option B) One in every five children in the United States is living in poverty.
Which of the following is an example of a positive economic statement?
A) Pollution is one of the most serious economic problems.
B) Higher interest rates will encourage more savings.
C) The pricing policies of monopolies should be strictly supervised.
D) Unemployment is more harmful than inflation.
The correct answer for the given question is option B) Higher interest rates will encourage more savings.
Which of the following is a normative statement?
A. Reducing the budget deficit will also reduce the balance of trade deficit.
B. Tariffs on imported cars result in higher prices for domestic auto consumers.
C. A tax cut will cause higher inflation.
D. The governments should spend more to aid the poor.
The correct answer for the given question is option D) The governments should spend more to aid the poor.
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