Q.Explain the difference between positive and normative economics with one example each.

Economic statements can be sorted into two kinds depending on whether they describe facts or express opinions.

Positive economics deals with statements that describe 'what is' — cause-and-effect relationships between economic variables that can, in principle, be checked against real-world data. For example, 'When the price of petrol rises, the quantity of petrol demanded falls' is a positive statement: one can look at actual sales figures before and after a price change and confirm or refute it. Normative economics, by contrast, deals with statements about 'what ought to be' — opinions, value judgments and policy recommendations that depend on what someone believes is fair, just or desirable. For example, 'The government ought to reduce the price of petrol to make life easier for the poor' is a normative statement: it cannot be proved true or false by data alone, because it rests on a value judgment about who deserves government support. Most real economic policy debates combine both: a positive analysis of what a proposed policy will actually do, followed by a normative judgment about whether that outcome is desirable.