Positive Economics vs Normative Economics

|Definition of 'Positive Economics' |
|The study of economics based on objective analysis. Most economists today focus on positive economic analysis, which uses what is and what has been occurring in |
|an economy as the basis for any statements about the future. Positive economics stands in contrast to normative economics, which uses value judgments. |
|Investopedia explains 'Positive Economics' | |
|For example, a positive economic statement would be: "Increasing the interest rate will encourage people to save." This is considered a positive economic | |
|statement because it does not contain value judgments and its accuracy can be tested. | |
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|Most of the information we hear in the media today is a combination of positive and normative economic statements or theories. Because of this, investors should | |
|always be careful to separate out what is objective and what is subjective analysis.