Normative economics involves statements that are based on opinions, values, or judgments about what ought to be. It focuses on the desirability of certain aspects of the economy and prescribes policies to achieve desired outcomes, unlike positive economics, which is purely based on facts and cause-and-effect relationships without any judgments.

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Normative Economics

Question 26

Multiple Choice

Normative economics:

A) deals with the establishment of goals based upon value judgments
B) deals only with facts and objective analysis
C) offers no policy prescriptions
D) refers to the normalization of trade relations among warring nations

Correct Answer: