Normative Economics

Normative economics is a branch of economics that is concerned with welfare propositions and prescriptive statements. It deals with what ought to be, rather than what is. Normative economics is essentially based on value judgments and subjective opinions about what is good or bad for society. It is concerned with the determination of policies and their impacts on the overall welfare of the society.

Difference between Normative and Positive Economics

Normative economics differs from positive economics, which is concerned with the description and explanation of economic phenomena, without making any value judgments or prescribing any policy recommendations. Positive economics deals with what is, rather than what ought to be. It is based on empirical observations and measurable data, and its conclusions are testable and objective. Positive economics aims to provide a scientific and objective analysis of the economic system, without any subjective biases or opinions.

Examples of Normative Economics

Normative economics can be seen in areas such as public policy, taxation, and government spending. For example, a normative economist may argue that the government should increase spending on education, as it would lead to better job opportunities and a higher standard of living for the population. This is a prescriptive statement that is based on the opinion that education is a public good that should be provided by the government.

Importance of Normative Economics

Normative economics is important because it helps us to evaluate the impact of policies on society and to make informed decisions about public policy. It provides a framework for analyzing the trade-offs between different policy options and their impact on the overall welfare of the society. Normative economics can help policymakers to make decisions that are based on the best available evidence and that take into account the needs and preferences of the population.

Correct answer option d. normative economics. explanation: socialist economics controlled under government, capitalist economics aim only to get profit.welfare of people is not there goal, positive economics works in past event basis and normative economics thinks about future and so do welfare propositions.