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Saturday, 6 August 2011

Word of the Day

A positive statement

A statement that can be proven to be true or false. A positive statement does not contain any bias and is simply a fact or a false fact. For example, if I say that paper is not made from wood, this is a positive statement because one can test what paper is made from (the statement will inevitably be made untrue since paper is made from wood, however that doesn't mean the statement is not a positive one).

In economics, it is useful to identify a positive statement from a normative statement.

A normative statement

A statement that is based on opinion and cannot be proven true/untrue. For example, 'fiscal policy is more effective than monetary policy at increasing aggregate demand', is a normative statement because it contains one's view and cannot be tested (because fiscal and monetary policy are frequently used hand in hand).

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