Positive Economics

Question 1

Explain Positive Economics with the help of its characteristics :-

Answer 1

1. Its assesses the working of the economy and the economic policies on the basis of tested and confirmed hypotheses.
2. It doesn’t make value judgements ⚖ or opinions on the working of the economy or the economic policies.
3. It takes into consideration the empirical data and statistics to reach to its either confirmed or rejected hypotheses.
4. eg; increase in money supply will lead to rise in prices.

Question 2

Explain the features of Normative economics :-

Answer 2

1. The economy and the economic policies are assessed on the basis of opinions and value judgements.
2. The Normative Economics hypotheses cannot be tested, confirmed or rejected.
3. Eg ; the inflation rate is too high
4. There are maximum number of disagreements amongst the normative economists due to differences in value judgements and opinions.