Positive and normative economic statements – Flashcards
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Positive economics is
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concerned with facts and is value free.
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Positive economics statements can
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be tested to fond out if they are true or false
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A positive economic statements is
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an increase to the national minimum wage will cause unemployment.
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Normative economics is concerned with value judgements and is
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a non-scientific approach to this discipline.
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Use the term 'value judgement' rather than
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opinion
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A normative statement is
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an expression that something is right or wrong, it includes words such as 'ought, should, fair, unfair, better or worse.'
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An example of a normative statement is
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'the reduction of the UK top rate of income tax from 50% to 45% is unfair.'
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Value judgements have a major influence on
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economic decision making fro consumers and producers and influence their behaviour.
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Consumer/producers behaviour can be summed up as
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cautious or involving risk. This can be applied to Government economic behaviour as well.
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Normative economic judgements
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cannot be tested as true or false
