Identifying Economic Concepts in the News
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Positive (or analytical) Economics is objective, without emotion or value judgements. It has to do with “what is,” while normative economics has to do with “what ought to be.” Positive economics is based on theory, probability, and statistical methods. When searching for positive economic statements I found in the business section of the September 12, 2005 issue of the Toronto Star an article based on the economies foundation and cheaper insurance. This business article written by Steven Theobald is called “Fixed rates now seen as “cheap insurance” and is where I found 2 out of my 3 positive economic statements. The first positive statement I found In this article was when Steven stated “others are predicting mediocre economic growth will force the Bank of Canada to stop at 3 per cent until at least the end of 2006” This statement is based on statistics and has no judgment or opinion from the writer, and because of these characteristics the statement is positive. But beyond that in this statement there is a prediction for the future and is not a factual fact that is present now or had to do with the past which falls into the a conditional branch of Positive economics. Another Positive statement Steven makes is “About 45 per cent of the 45,000 mortgages arranged last year were based on variable rates, up from 25 per cent five years ago” This positive economic statement involves research and factual statistics which is what makes it positive but unlike the first one its a descriptive statement. This is because it depicts facts of the present day saying 45 per cent of the 45,000 mortgages arranged last year were based on variable rates. But it also talks about the past saying variables rates are up 25 percent from five years ago. The depiction of statistics from past and present is what makes it a descriptive statement. Lastly for the final positive statement I looked to an article written by Kevin Mcgran titled “GO riders pare themselves fare hike. In this article in the second column Kevin says “Go officials are confident they can avoid a 5 per cent per fare fuel surcharge with rider ship growing at an annual pace of 4 percent – higher then the anticipated and some 2.9 million in savings through deferred”. This final statement is a positive and also descriptive and this is because in this article Kevin is using sold stats to get his point across. For example “2.9 million in savings through deferred” this is not opinionated or does not have a prediction for the future it just states statistics that have to do with the present. In conclusion positive economics describes the world as it is, rather than trying to change it, and whether its descriptive or conditional we are still referring to objective and non emotional or opinionated statements when it come to positive economics.
Normative economics is the branch of economics that incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. Contrast with positive economics which is also known as value-free economics. The examples I found of normative economics was in an article by David Crane found from the internet. This article was titled “Energy Strategy urgently