What is a normative economy?

Normative economy is an approach to analyzing economic events and factors in a way that allows rooms for a certain level or personal interpretation. This is, unlike a positive economy, where it is a rule to focus on hard facts with a small or no subjective opinion contained in the presentation. The format of normative statements concerning economic events is often calm in Verbiage, which indicates possible future events resulting from current events based on individual speculation and interpretation of available data. The subjective statement may not assume that the status quo will be maintained in the future, but that by the implementation of one or more specified courses of activities, an economic situation that is very different from the current will appear. Often a statement of this type provides specific guidelines that, if implemented, have at least a chance to lead to the desired result.

The process of the normative economy would include a statement about something that the speaker would believe that it should take place in the future. For example, if a politician refers to current data regarding consumer expenditure in a given nation and a statement that the government should reduce taxes by a certain percentage to provide taxpayers more disposable income, this statement is based on projections of what can happen than what is happening. On the other hand, a positive or objective statement would include a note that while tax cuts could be useful, current data suggest that government agencies would have to reduce expenditures before the tax reduction would become feasible. The difference is that one statement focuses on the possible result of creation, while the other has to do with what it must happen before it can be done.

It is not uncommon for a normative economy to play a role in many statements made through the media. Even kdsThese statements are subjective and sometimes considered impractical, it is not necessary, does not mean that they are without a base. In order to actually be based on a normative economic approach, this comment must have the basis of currently verifiable facts and provide a projection that at least some logic in terms of how this proposed event would affect the economy. From this point of view, the normative economy reports provide a valuable service in that they can form the basis for new ideas and approaches and assistance in setting functional goals for the future.