Positive and Normative Economics | HSEB Notes for Class 11 Commerce Students

 Economics

HSEB Notes on Positive and Normative Economics

Class : 11

Positive economics

The concept of positive economics was introduced by classical and modern economist Robbins Positive economics is related with the description of economics event. The study of what is or what exist is called positive economics. It analyses every issue of economics positively, without personal judgment. It Explains the cause of effect, relationship of economic variable. For example: When the government imposes tax on goods, the price of the goods will rise.

According to JM Keynes, “A positive science may be defined as a body of systematized knowledge, concerning what is”. In brief positive economics studies how the economy actually believes. So it works, for decision making about production, consumption according of goods and science of society

Normative economics:

Normative economics is based on subjective value judgment. It makes prescription about what should be done.For example: What should be the wage rate? What measure should be taken to remove unemployment? Etc. The neo-classical economics Marshallsays, “Economics is a normative science”. Here is an example of normative economic. Nepalese are poor because of low production. The government must provide food subside to poor. Here, the first part of the statement is positive economics and the second part is normative economics as it suggests to the government.

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