Positive and Normative Economic Statements

Question 1

Normative Statement

Answer 1

Normative statements express an opinion about what ought to be. They are subjective statements - i.e. they carry value judgments. For example, the level of duty on petrol is unfair and unfairly penalizes motorists.

Question 2

Positive Statement

Answer 2

Objective statements that can be tested or rejected by referring to the available evidence. Positive economics deals with objective explanation. For example: “A rise in consumer incomes will lead to a rise in the demand for new cars.” Or “A fall in the exchange rate will lead to an increase in exports overseas.”

Question 3

Value Judgement

Answer 3

A view of the rightness or wrongness of something, based on a personal view.