1. Positive Economics: Positive economics is concerned with the objective statements based on facts, circumstances and relationships in an economy, that is, objective consideration of what is happening or bound to happen with due reliance on prior evidence. It is therefore based on predetermined theories and principles (tested against evidence) of the discipline, for example, what is the effect of a reduction in the standard Value Added Tax (VAT) rate on government revenue. Positive economics is
supposed to be completely objective, limited to the cause-and-effect relationships of economic activity; it is concerned with the way economic relationships are.
2. Normative Economics: A normative statement involves ethics and value judgments whose explanations are based on deeply held values or morals. It is concerned with expressions of value judgment(s) as to what one would like to happen (what ought to be). These judgments can be argued about but they cannot be settled by referring to predetermined principles which give predictable results (science) or reference to facts. Economists, for instance, may argue about the type of economic system or the standard of living in society they would like to see which is all about what ought to be and usually settled by choice; for example, should a free port encourage beneficial increase in economic activity or should government spending on defense increase or decrease and by what percentage or does taxation allocate resources more efficiently? All these questions have no predetermined answers and are therefore subject to value judgments and discussions.
Wilfykil answered the question on February 4, 2019 at 09:39