Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is the definition of Positive Economics?

1. Emotional statements about economy

2. Subjective opinions on policies

3. Objective statements based on economic theory

4. Statements about should and ought

The correct answer is: Objective statements based on economic theory

Positive economics refers to a branch of economics that focuses on objective analysis and factual statements without incorporating personal beliefs or biases. It seeks to describe and explain economic phenomena as they are, relying on data and observable facts rather than subjective opinions or normative judgments. The correct answer is significant because positive economics deals with what is, using empirical evidence to support conclusions. For instance, it would analyze the impact of a tax increase on consumer spending based on actual economic data, rather than making recommendations about whether the tax should or shouldn't be enacted. In contrast, emotional statements about the economy, subjective opinions on policies, and discussions of what should or ought to happen fall into the realm of normative economics, which is more about value judgments and interpretations rather than objective assessments. This distinction is essential for understanding the difference between analyzing economic issues and making policy recommendations based on personal beliefs or opinions.