Unemployment rate is unacceptably high. Is this positive economics, normative economics, or art of economics and why
Take a shot, what do you think? Hint: I think Normative
Determining whether a statement like "unemployment rate is unacceptably high" belongs to positive economics, normative economics, or the art of economics depends on the nature of the statement. Let's explore each:
1. Positive economics: Positive economics deals with objective, factual statements about the economy, focusing on what is and can be measured. It avoids value judgments and instead focuses on explaining cause and effect relationships. For example, a positive economic statement regarding the unemployment rate might be "the unemployment rate increased by 2% in the last quarter." This statement is purely factual and observable.
2. Normative economics: Normative economics, on the other hand, involves subjective value judgments and opinions about what should be. It addresses issues of fairness, equity, and what people consider to be desirable or undesirable economic outcomes. Therefore, a normative economic statement related to the unemployment rate could be "the government should take immediate action to reduce the unemployment rate." This statement expresses an opinion about a desired economic outcome.
3. Art of economics: The "art of economics" is a broader term that encompasses a combination of positive and normative economic aspects with a focus on practical application and analysis. It involves using economic knowledge, theories, and data to inform decision-making and problem-solving. This could include analyzing the causes of high unemployment, proposing solutions, and evaluating potential outcomes.
Given the statement "unemployment rate is unacceptably high," it falls within the normative economics category. It expresses a subjective judgment about what the ideal level of unemployment should be. However, it's worth noting that the statement may also involve elements of the art of economics if it leads to an analysis of the causes and potential solutions related to the high unemployment rate.