Question

In a paragraph, distinguish between positive statements and normative statements in economics

Answer 1

Positive statements are statements which contain facts or empirically observed phenomenon. Positive statements do not deal with opinions or value judgments. Following are some examples of positive statements:

• India's GDP growth rate for the year 2017 was 7.2%
• The USA is the largest economy in the world
• When everything else remains constant, demand goes up when the price goes down and demand goes down when price goes up

Normative statements are statements which deal with opinions or value judgements. These statements do not state facts or empirically observed phenomenon. Following are some examples of normative statements:

• The government should increase the minimum wage
• The central bank should lower the interest rate
• Income tax rate should be reduced

Therefore, in short, positive statements states 'how things are' and normative statements state 'how things should be.'