The correct answer is option 1: Positive economics
- Positive economics deals with facts, figures, and objective analysis of economic issues. It focuses on what is happening in the economy rather than opinions or value judgments.
- It relies on data, statistics, and empirical evidence to explain economic behavior and outcomes.
- Example: "An increase in interest rates leads to a decrease in borrowing."
Analysis of other options:
- Normative economics is incorrect because it deals with opinions, value judgments, and what should be done rather than factual data.
- Microeconomics is incorrect because it studies individual economic units like households and firms, but it can include both positive and normative aspects.
- Welfare economics is incorrect because it focuses on evaluating economic well-being and policies, often involving normative analysis rather than pure facts and figures.
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