Explain the Differences Between Positive Economics, Normative Economics, and the Art

question 25

Essay

Explain the differences between positive economics, normative economics, and the art of economics. Explain why you would categorize each of the following three statements as belonging to positive economics, normative economics, or the art of economics.
(a) The unemployment rate is 6.5 percent.
(b) The unemployment rate is unacceptably high.
(c) If the government wants to reduce the unemployment rate, it should try cutting taxes.

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Definitions:

Economist Expectation

The forecasts or predictions about economic factors like inflation, growth, or interest rates made by economists.

Quantity Demanded

The specific amount of a good or service that consumers are willing and able to purchase at a particular price.

Economic Profits

Profits calculated by subtracting both the explicit and implicit costs from total revenues, representing the additional value created beyond all opportunity costs.

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the additional output will eventually decrease.