What is the difference between a positive approach to the study of economics and a normative one?

A positive approach to studying economics is based on evidence, and a normative approach is based on data that should be.

When analyzing statistical data, a positive economy studies the actually occurring economic processes and can perfectly answer economic questions (Why is the volume of production declining? What methods does the company use to achieve profit? …) It explains how and why it happens, but does not give recommendations on how it should be …

Normative economics – subjective judgments based on the elementary truths of economics about what economic processes and the economy as a whole should be.



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