Identify the following statements as positive or normative and give
reasons.
(1)India has a large number of poor people.
(2)The government should spend more on education.
(3)Poor people are suffering due to price rise of essential
commodities.
(4)Bank has increased its interest rate.
(5)People should be encouraged to save in post offices and
commercial banks.
Answers
Identify the given statement are normative or positive.
1. India has a large number of poor people .
→ Positive economics.
Because we can calculate the number of poor people by data.
2. The government should spend more on education .
→ Normative economics.
This is obviously a opinion .
3. Poor people are suffering due to price rise of essentials.
.→Positive economics.
We can check whether poor people are suffering or not by the data .
4. Bank has increased its interest rate.
→ Positive economics.
We areprovided with the data that bank has increased or decreased its interest rate and we can compare it with the earlier rate also .
5. People should be encouraged to save in post office and commercial banks.
→ Normative economics .
This is obviously an opinion.
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Positive economics :-
It deals with the economic issue related to past present and future and can be studied by using facts and figures .
Normative economics :-
It is the economics of what ought to be riddles with opinion of economists related to economic issue or economic problem.