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Introduction of Micro-Economics — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsIntroduction of Micro-Economics2 Marks
Question
Discuss on what basis the difference is made between positive economic analysis and normative economic analysis.
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Answer

Positive Economic Analysis : It deals with "what is" or "how things actually work" in the
economy. It is based on objective facts and data that can be tested or verified. For example, "An increase in interest rates will reduce inflation."
Normative Economic Analysis : It deals with "what ought to be" or "how things should be". It is based on subjective values, ethics, and opinions which cannot be verified with data. For example, "The government should provide free healthcare to everyone."

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