ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An example of a normative economic statement is: “The government should provide basic healthcare to all citizens.” As you can deduce from this statement, it is value-based, rooted in personal perspective, and satisfies the requirement of what “should” be.

Detailed explanation-2: -For example, workers’ wages are $5 per hour. It is a statement of positive economics. If we now say that the workers’ wages should be more than $10 per hour, it would be a statement under normative economics.

Detailed explanation-3: -Normative economic statements are those statements that express an opinion or judgement. They cannot be proven and do not contain facts. Often the words ‘ought, ’ and ‘should’ are found in these types of statements. In contrast, positive economics are based on facts and evidence, and can be proven true or false.

Detailed explanation-4: -To check the inflation, RBI should restrict the money supply is suggesting us a measure to make the situation desirable that is keep a check on inflation and thus the statement is normative in nature.