Positive Economic Analysis

Positive economic analysis is an approach that focuses on studying and understanding economic variables as they are, rather than how they should be or how they are expected to be. This type of analysis is based on empirical evidence and uses objective data to examine the current state of the economy and its various components. It aims to describe and explain economic phenomena without making normative judgments or value judgments about what is desirable or optimal.

Variables in Positive Economic Analysis

In positive economic analysis, variables are the factors or elements that are being studied and analyzed. These variables can include a wide range of economic factors such as GDP, inflation rates, employment levels, consumer spending, government policies, and market trends, among others.

The correct answer to the question is option D - "As they are." This means that positive economic analysis deals with variables as they currently exist in the real world, without any expectations or assumptions about how they should be or how they are expected to be.

Explanation of the Correct Answer

Option D is the correct answer because positive economic analysis focuses on analyzing economic variables based on their actual state and behavior. This approach avoids making subjective judgments or assumptions about what is desirable or optimal in the economy. Instead, it seeks to understand and explain economic phenomena by examining data and evidence.

By analyzing variables as they are, positive economic analysis provides a more objective and unbiased understanding of the economy. It helps economists and policymakers gain insights into the current economic conditions, identify trends, and make informed decisions based on empirical evidence.

Positive economic analysis also allows for the examination of cause-and-effect relationships between variables. By studying the relationships between different economic factors, economists can determine how changes in one variable affect others, which can be useful in predicting future economic outcomes.

In summary, positive economic analysis deals with variables as they are, providing an objective and evidence-based understanding of the economy. It avoids making normative judgments or assumptions about how variables should be or how they are expected to be, focusing instead on empirical analysis and data-driven explanations.