Question 1 (a)
Positive and normative economics, and two statements classified
4 marks
- Time to write
- About 8 minutes
Question
Question 1 (a) · 4 marksDistinguish between normative economics and positive economics. Is each of the following statement positive or normative?
The annual GDP growth rate should be 6%.
More subsidies will raise the overall expenditure of the government.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- Distinguish…Is…?Two asks in one question: answer both.
- Is each of…?A yes-or-no question: answer it in your first line, then explain why.
- Distinguish betweenSet the differences out in a table, basis by basis, not as two separate essays.
What the paper leaves open
As printed, "the following statement" is singular although two statements (i) and (ii) follow; the marks (4) cover the whole of Q1 (a).
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Positive and normative economics distinguished 2 marks 3 min
- 2 Statement (i) classified with the reason 1 mark 2 min
- 3 Statement (ii) classified with the reason 1 mark 2 min
Short on time? Step 1 carries 2 of the 4 marks: guard its minutes.
Try it first. About 8 minutes for 4 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
The distinction. Positive analysis studies how an economic mechanism works and what results it produces; normative analysis asks whether those results or mechanisms are desirable.
| Basis | Positive economics | Normative economics |
|---|---|---|
| Question asked | What is, or what will happen? | What ought to be? |
| Nature of the statement | Describes or predicts | Recommends or judges |
| How it is settled | Can be tested against facts, and may turn out true or false | Rests on values, so facts alone cannot settle it |
| Typical wording | is, will, causes | should, ought to, better |
The line is not perfectly sharp, since the two are closely related: a sound judgment of what ought to be done needs an understanding of how things work.
Statement (i), the 6% growth rate that should be reached. This is normative. The word should marks a target or a recommendation. No data can prove that 6 per cent is the right aim, since that depends on how growth is weighed against other goals.
Statement (ii), the effect of more subsidies on government expenditure. This is positive. It predicts a cause and effect that can be checked against budget figures. It stays positive whether or not it turns out true, and it says nothing about whether subsidies are good.
Conclusion. Statement (i) is normative and statement (ii) is positive: the test is whether a claim can be checked against facts or depends on a value judgment.
Where the 4 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Positive and normative economics distinguished | 2 |
| 2 | Statement (i) classified with the reason | 1 |
| 3 | Statement (ii) classified with the reason | 1 |
| Total | 4 |
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