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Positive & Normative Economics [Class XI-XII, Unit 1 : Introduction] - YouTube
Channel: Commerce Made Fun by Neelu Chathli
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Hi Everyone
Today's topic is Positive vs Normative Economics.
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Now, we all know this is a very easy topic
but for some people it gets confusing.
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Why?
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Because we try to rote learn whatever we read
but the point is that these two words are
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so closely related to your real life that
you don't have to rote learn anything.
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You just need to understand.
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So, let's understand how to do this.
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Let us talk about a normal situation where
a person X goes to a doctor, would the doctor
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prescribe any medicine without even knowing
what the problem is?
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NO
What would the doctor do?
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He would first identify what is the actual
problem that X has and only after identifying
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the problem will the doctor give out a certain
solution or a medicine for the same.
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Right?
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Everyone agrees with me?
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Same way.
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there are many problems in Economics, if we
start taking any decisions without thinking
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about them, we may not necessarily be able
to solve the problem that we have.
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So, the point is, We have two separate type
of Analysis in Economics - One is the Positive
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Economics.
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Positive Economics basically deals with identification
of the problem and then the Normative Economics
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comes in for the solutions to that problem.
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This implies that only identifying the problem
isn't going to help and nor would trying to
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solve the problem without identifying it properly
would be of any help.
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So, what we need is - a combination of these
two Analysis.
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First, we will see what the problem actually
is and then we will see how to solve it.
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If we say, In India, farmers are more dependent
on rainfall - What is this?
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This is identification of the problem.
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But only saying that this problem is present
is not going to solve it.
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It is actually of no use.
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What we do is - We first identify and then
we start thinking about what is to be done.
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Like we can say Irrigation facilities should
be developed so that the dependency of farmers
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on rainfall could be reduced.
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So, basically, Positive Economics would be
dealing with facts - What is?
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How is it?
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What is the actual problem?
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And Normative Economics would be dealing with
- How can we solve this problem?
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What is the plan of action or what is the
step that we can take so that we could solve
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this problem.
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So if we try to observe the differences between
Positive & Normative Economics then:
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1.
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Positive Economics deals with things as they
are but Normative Economics deals with things
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as they ought to be.
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2.
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Positive Economics deals with facts and is
thus verifiable but Normative Economics deals
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with idealistic situations - How it should
be?
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Normative statements cannot be verified.
3.
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Positive Economics only states the facts but
does not provide solutions for the same but
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Normative Economics deals with how to get
to the solutions of the economic problems.
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So friends, this is it for today - Positive
vs Normative Economics - It is quite an important
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topic for you as it is generally asked in
difference form.
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Be sure to share this video, SUBSCRIBE to
my channel to get all important pointers and
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tippers in the future as well.
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Also, if you want to see the previous topic,
i.e., Causes of Economic Problems - Please
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click on the given link.
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Bye for now everyone!
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