Positieve en normatieve economie

Economics has two fundamental branches. They are positive and normative economics.

Positive economics is about objective statements that can be tested and proven right or wrong. It explains what is happening in the economy and focuses on facts and cause-and-effect relationships. Studying it provides explanations based on evidence and data.

For instance, if the prices of apples go up, people buy fewer apples. This is a positive economics statement as it gives a factual description that can be checked.

On the other hand, normative economics deals with subjective statements, expressing value judgments about what the economy should be like or what policy actions should be recommended.

It provides choices by giving opinions based on values and encouraging careful and ethical decision-making in economic situations.

For instance, the government should reduce taxes to boost consumer spending. This statement involves a value judgment, expressing what actions the government should take, making it a normative statement.

The combination of normative and positive economics guides effective policymaking for informed decision-making.