ECON 101 Lecture Notes - Lecture 3: Microeconomics, Macroeconomics
Document Summary
Positive and normative economics seeks to assess what is. Normative economics addresses what it should be. Positive economics basically deals with the relationships between cause and effect which can be checked. Normative economics deals with untested value judgments and views. Many economic issues can be debated both within a constructive context and within a normative framework. Allow a proposed federal income tax cut. An economist who practices constructive economics would like to know the impact of an income tax cut. We may want to know, for example, how a tax cut would affect the unemployment rate, economic growth, inflation, etc. An economist who practices normative economics should discuss problems that contribute directly or indirectly to how the federal income tax should be cut. She may say, for example, that federal income taxes should be lowered because the income tax burden is already high on many taxpayers.
