Slide 5 of 16
Before we get to some of those topics, we need to distinguish two other branches of economics. Normative and positive economics. Normative economics tends to be subjective, value laden, and emotional in its presentation. Normative economics is often referred to as “What ought to be” economics. “We ought to do this,” or “we ought to do that.” Normative economics is “prescription” and/or policy oriented. During political elections, we hear a great deal of normative economics from the candidates for office. Every four years a new person comes along that claims they have the answer to all of the our country’s economic problems. “We should raise taxes.” “We should lower taxes.” “The rich do not pay enough taxes.” These are all normative economic statements.
“That person is hungry, we have to feed them.” Again, a normative statement.