Question

classify the following into by positive economics or normative economics with suitable reason

i) Consumer price index presents a more realistic picture of the inflaction rate in a country than the wholesale price index.

ii) Subsides should be offered very carefully

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Answer 1

We are asked to classify the items provided according to positive or normative economics by providing a reason. The items provided will be divided into positive or normative economics as under:

• The two main schools of contemporary economics are positive and normative.
• Positive economics explains and defines a variety of economic phenomena.
• Normative economics is concerned with the importance of economic fairness or how the economy ought to function.
• Positive economics is also known as the "what is" field of economics.
• The branch of economics known as normative economics, on the other hand, is thought to be the one that tries to ascertain the desirability of certain economic policies and situations by asking questions like what, whom, or why.
• So on the basis of the above definitions, we can classify the first sentence as positive economics as it explains and defines an economic phenomenon.
• The second sentence can be classified as normative economics as it deals with what should and ought to be done. In other words, subsidies should be given to whom and why.

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Answer 2

Answer:

First sentence is- positive economics and second sentence is normative economics.

Explanation:

Positive economics and normative economics are two standard branches of modern economics. What is Positive economics and Normative economics -Positive economics describes and explains various economic phenomena, while normative economics focuses on the value of economic fairness or what the economy should be. To put it simply, positive economics is called the "what is" branch of economics.A normative economics example is, “The government should make available fundamental healthcare to every citizen”.So on the basis of the above definitions, we can classify the first sentence as positive economics as it explains and defines an economic phenomenon.The second sentence can be classified as normative economics as it deals with what should and ought to be done. In other words, subsidies should be given to whom and why.Hence, the first sentence is of positive economics and second sentence is about normative economics.

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