Two Statements/Economics

MD.Tuhin Parves

ID:B3160B005

Batch:BBA-03

Economics is a science as well as art. But

which type of science is a big question here,

i.e. positive or normative? Positive economics

is related to the analysis which is limited to

cause and effect relationship. On the other

hand, normative economics aims at examining

real economic events from the moral and

ethical point of view.

Economics ?

Positive Economics

Positive Economics is a branch of economics that

has an objective approach, based on facts. It

analyses and explains the casual relationship

between variables. It explains people about how the

economy of the country operates. Positive

economics is alternatively known as pure economics

or descriptive economics.

The economics that uses value judgments,

opinions, beliefs is called normative economics.

This branch of economics considers values and

results in statements that state, ‘what should be the

things’. It incorporates subjective analyses and

focuses on theoretical situations.

Normative Economics

BASIS FOR

COMPARISON

POSITIVE ECONOMICS NORMATIVE ECONOMICS

Meaning A branch of economics

based on data and

facts is positive

economics.

A branch of economics

based on values,

opinions and

judgement is

normative economics.

Nature Descriptive Prescriptive

What it does? Analyses cause and

effect relationship

Passes value

Judgement

Perspective Objective Subjective

Study of What actually is What ought to be

Testing Statements can be

tested using scientific

methods

Statements cannot be

tested

Economic issues It clearly describes

economic issue

It provides solution for

the economic issue

based on value

After the above discussion, we can say that these two

branches are not contradictory but complementary to

each other, and they should go hand in hand. While

laying down laws and theories, economics should be

treated as a positive science, but at the time of practical

application, economics should be treated as a

normative science.

Conclusion