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Question

Explain the concept of positive and normative economics with examples.


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Solution

Positive economics refers to the matter of the presence of the theory along with the proven facts and figures that are taken into account before developing a theory. Law of demand is an example of positive economics.

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Normative economics refers to the beliefs that support the valued judgement which is better for the nation’s economic future and for social welfare. Having a belief that the income should be distributed evenly in the economy is an example of normative economics.


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