What is Positive Economics? – Everything You Need to Know

Our daily lives are connected to the economy even when we wake up and go shopping for bread, even when we travel, pay our bills, and rush home at the end of the day for an important show.

Each of us is connected with the economy and the processes related to this field. The country’s economic situation determines all aspects, even what our salary will be, what it will cost to rest, study, and live in general.

Have you heard anything about positive economics? What might this mean? Any positives and reasonable rates? If the name is tempting? Today we will talk about the buoyant economy and its importance. Let’s dive in.

Positive economics refers to objective analysis in the study of economics. Most economists keep track of what has happened and what is happening in the present economy to make a basis for forecasting the future. It is this investigative process that is a buoyant economy. In contrast, normative economic research bases future forecasts on value estimates.

A cornerstone of positive economic practice is the study of fact-based financial relationships, behavioral finance, and cause-and-effect interactions to develop economic theories. Behavioral economics is a prerequisite based on psychology. This means that people will make rational financial choices based on their information. Because of the use of fact-based reasoning, this study refers to “what is” economics. While normative economics refers to studying “what should be” or “what should have been.”

Positive Economics Past

The past of positive economics stage back to the 19th century. At this time, the idea of ​​”what it is” was first put forward by economists John Stuart Mill and John Neville Keynes.

According to Keynes, logic, and methodology are essential in the study of economics. Mill petitioned the economy from input such as the contact between supply and demand. These early economists also developed particular theories to support economic observations and used factual evidence.

These ideas were later adapted by Milton Friedman, one of the most influential economists of the 20th century. Milton was a strong opponent of monetary policy. He believed that this played a significant role in the Great Depression.

Positive Economics Ideology

Specific data can corroborate the conclusions drawn from the positive economic analysis. For example, the prediction that if interest rates rise, more people will save money will be based on a buoyant economy, as past behaviors support this ideology.

This analysis is objective. A lot of the data provided by the television is a mix of normative and positive economic charges. Positive economic ideology can comfort policymakers appliance normative amount judgments. This ideology can describe how the government can influence by printing more money than inflation; Also support a specific statement by analyzing behavioral relationships and facts.

Both positive and normative economics implies a clear understanding of public policy. Both theories include facts and statements that are combined with reason-based analysis. When formulating a policy agreement, it is desirable to know the details of the events and the positive economic backdrop of behavioral finance.

Positive Economics Advantages

What is Positive Economics? – Everything You Need to Know A buoyant economy is based on facts and objective data. For example, it is possible to use historical data to determine the relationship between consumer behavior and interest rates. High-interest rates force customers to stop taking out a loan because it means more interest on interest.

Because this ideology is based only on facts and data, there is no value judgment in a buoyant economy. This allows policymakers to take appropriate measures that are important to address any economic situation. For example, to prevent a recession, the Federal Reserve can cut interest rates.

Individual opinions have a significant influence on economic policy. For example, people often make decisions based on emotions in their financial life. This can lead people to make the wrong choice. According to the data, it is necessary to make reasonable decisions.

Positive Economics Disadvantages

Certain economic conditions are based on emotions, and the facts do not interest everyone. People often prefer to ignore data when making choices. However, the truth is that it is difficult to remove emotion from the economy.

The history of the data does not mean that you can conclude. This is because economics is not an accurate art. Many other considerations often affect the result.

Consequently, a buoyant economy may not be a unified approach. Policymakers use the data to find policies that work differently for all sectors. What works for one segment of the population does not affect others. Raising interest rates may be good for lenders. However, it is not suitable for borrowers, especially those who already have cash.

Fight for 15

Fight for 15 is a national movement that aims for a minimum wage of $15. Proponents argue that raising the minimum wage would be good; it seems detrimental to opponents.

There are many studies on raising the minimum wage. However, at this stage, there are no conclusions as to whether the higher minimum wage is good or bad. However, there are definite specifics from the program that can be treated as examples of positive economics.

Positive Economics Case

In 2015, Seattle issued a local ordinance to increase the minimum wage for workers in the city gradually. This meant that all workers would earn at least $15 an hour in 2021 or earlier. Based on specific details of employment. Two major studies have been conducted on the influence of anon.

A study conducted by researchers at the University of Berkeley focuses on restaurant staff. According to a study by Cal Berkeley, the unemployment rate in Seattle dropped to 3.6% in 2016. The average annual income of employees increased by 13.4%.

According to researchers, fast food restaurant employees saw revenue growth thanks to increasing Seattle’s minimum wage. These specific data are an example of a buoyant economy. However, the researchers’ conclusion that the higher minimum wage was successful is not a buoyant economy because the focus of the study was not broad enough to make such a conclusion.

Researchers at the University of Washington have concluded that raising the minimum wage has not been successful. However, neither of these findings is an example of a buoyant economy. Nevertheless, some specific data collected during the study are examples of positive economics.

They found that when the minimum wage was raised, working hours by low-paid employees were reduced. The wages of low-income employees fell by $125 a month after the minimum wage increased. While the number of low-paid workers decreased by 1%; Employee hours have also been reduced. Although these specific data are positive for economics, the researchers’ conclusion is still not entirely solid because other factors were not considered in the study.


Economics combines a lot of facts and facts with value judgments—economic flows, distinguishing between what is happening now and what may be in the future. A buoyant economy is an objective approach to research that allows one to conclude using facts. However, we still think that the best practice is to combine positive and normative economies when making decisions.

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