Economics is a vast subject encompassing various topics related to production, consumption, saving, investment, inflation, employment and unemployment, national income, international trade, quality of life, fiscal policy, monetary policy etc. so on and so forth. The list is unending. From the point of view of better understanding of the subject and finding a solution to the problem, it is imperative to know the nature of the economic issue under study and the area or branch under which the issue is dealt with.
MEANING OF ECONOMICS
The term ‘Economics’ is derived from two Greek words OIKOS
and NEMEIN, meaning the rule or law of the household. Economics therefore
is concerned with not just how a nation allocates its resources to various uses
but it ideals with the process by which the productive capacity of these
resources can be further increased and with the factors which in the past have
led to sharp fluctuations in the rate of utilization of resources. British economist
Robbins has defined economics as follows:
“Economics is the science which studies human behavior as a relationship
between ends and scarce means which have alternative uses.
Robbins definition is comprehensive in explaining the
scope of Economics. It is the problem of ‘choice’ which is all pervasive in
areas of consumer has to choose that combination of goods which ensures maximum
profit. Nobel Laureate Prof. Samuelson has spelled out Economics as follows:
“Economics is the study of how men and society choose, with
or without the use of money, to employ scarce productive resources which could
have alternative uses, to produce various commodities over time, and distribute
them for consumption now and it is future among various people and groups of society”.
POSITIVE VS N0RMATIVE ECONOMICS
While discussing the issues related to the economics conditions
and trying to find solutions to economic problems, economists often talk about
positive and normative nature of these issues. Positive economics deals with economic
analysis which are based on facts and statistical data. When an economics is
being described with statistical support, then we call it positive economics.
So, positive economics relates to the phenomenon of ‘what is’. On the other
hand, normative economics deals with the issue of ‘what ought to be’. Normative
economics deals with the issue of ‘what is’. On the other hand, normative
economics deals with the issue of ‘what ought to be’. Normative economics is
based on value judgement and debate which are required to arrive, normative
economics. Take the example of the issue of India’s population. It is the fact
that as per 2011 census. India’s population was around 121 crores. Since it is based
on the data, the statement relates to positive economics. But when we discuss
about the problems faced due to population pressure, economists and policy
makers recommend several solutions such as ‘India should control its population
by adopting family planning’ etc. such a thing comes under normative economics because
these can be debate on this policy. There are lot of economic problems faced by
the citizens and the economy as a whole. Data are required to justify that a
problem exists which is part of positive economics. When we try to find solutions
to the problem then value judgements are made and debates take place which
comes under normative economics.
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