1.1.2 Positive and Normative economic statements

Question 1

What are Positive Statements?
e.g. A rise in the minimum wage decreases employment.

Answer 1

Positive statements are objective statements that can be tested and evaluated based on empirical evidence

Question 2

What are Normative Statements?
e.g. The government should
increase spending on healthcare.

Answer 2

Normative statements are subjective statements - they carry one or more value judgements about what ought to be

Question 3

What is the role of values judgements in influencing economic decision making and policy?

Answer 3

Value judgements involve political considerations as well as positive analysis to shape which goal/outcome is prioritised - they involve personal belief + moral considerations