ECON 110 Chapter Notes - Chapter 2: Scientific Method, Econometrics
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ECON 110 Full Course Notes
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Positive statements: statements of what is or was or will be . They are testable as to whether they are right or wrong. Increasing the minimum wage increases youth unemployment: taxing carbon emissions reduces carbon emissions. Normative statements: statements of what should be . A value judgment is being made and so there is no right or wrong. You can use positive analysis to base decisions that are normative in nature. Examples: we should decrease the minimum wage, we should tax carbon. In this course, we will focus primarily on positive analysis but when we discuss policy issues normative aspects will come into play. Disagreements in economics: can be based on the positive. If the new theory explains things better than the existing theory it will replace the old theory. However that doesn"t mean its right, we must continuously test theories as new data becomes present.