Economy - Meaning, Positive and Normative Economy

Definition: 

The term of economy is existence from Yunani. The word of Yunani, “OIKAU”defined as household and “NOMOS” defined as rules. From the words, the Yunani society was making the rules of human behavior like how the people making the decision.

“Human have unlimited demand and usually want something exceeding than what that they afford whether someone a rich or poor. Due to this, they need to make the best choices and forced to release different options.”

From the statement above, “Economics is social science research about individual and society attitude to contribute and distributed the limited factors of production to produce the unlimited demand of the goods and services.”

Research in economy is included the microeconomics and macroeconomics issue. The both of that’s, is the research about the different part in economy. Microeconomics is research in the small unit of economy namely action by the Firm and Household while the macroeconomics is research about the whole of economy issue in the country included the inflation, unemployment, economy growth and so on. 

Economy Statements:

1. Positive Economy Statement: Positive economy statement is a statement which based on facts and not value judgement. Can be tested and verified.

Example: Ethiopia is the poorest nation in the world.

2. Normative Economy Statement: Normative economy statement is a statement which is bases on value judgement and on personal opinion.  Cannot be tested.

Example: The government of Ethiopia is very inefficient.