Question

Explain the concept of positive and normative economics with illustrations

Answer 1

Normative Economics

It talks about what ought to be / how economic problems should be solved.

It is suggestive in nature, and is based on individual opinion.

It cannot be proved by facts.

Example - Steps should be taken to control the rising prices in the Indian    

                 economy.

Positive Economics

It talks about how the economic problems are actually solved.

It is not suggestive, and is backed by hard evidence.

It can be proved by facts.

Example - Prices are constantly rising in the Indian economy.