Positive economy - What is it? characteristics, examples, and more

positive economy

Branch of economic analysis that is based on specifying, demonstrating, and answering economic questions from reason.

What is positive economics?

Positive economics is the branch of economic analysis that is based on specifying, demonstrating, and answering economic questions from reason. In other words, it describes economic functioning objectively, from the point of view from which things happen.

Unlike normative economics, which offers recommendations, in positive economics advice is not provided to remedy economic problems, but the problems that affect the economy are described through concrete, real and accurate data, without mentioning whether the results will be positive or negative.

Characteristics of the positive economy

The main characteristics of positive economics are as follows:

• It studies the causes of the occurrence of economic phenomena.
• It is specific, objective, and shows what happens in economic reality.
• predict economic consequences.
• It does not offer recommendations on managing the economy.
• It is based on economic analyzes that can be tested and verifiable.
• It is based on theoretical and scientific concepts.

Examples of positive economics

The following situations are examples of positive economics:

• The decrease in investments in the year 2020 caused an increase in unemployment.
• The Central Bank of Argentina increased interest rates to 35% on 90-day deposits, to stimulate savings in the population.
• Declining prices for Ford Model T cars increased demand for the cars and strengthened Fordism.
• China's Gross Domestic Product (GDP)is higher than that of Vietnam.
• The COVID 19 pandemic has had an impact on GDP because the purchasing power of consumers has decreased.
• One of the causes of the drop in oil prices is the reduction in energy demand by consumers.
• The last tax reform increased the percentage of VAT on residential public services.
• The number of new companies incorporated in Spain increased by 15.6% in the first quarter of 2021.
• The Agricultural Origin and Destination Price Index (IPOD) fell by 4.7% in March in Argentina.
• The GDP in Spain increased by 16.4% in the last quarter of 2020.

 

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