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Normative Theory Versus Positive Theory

In general, a positive theory is a theory that attempts to explain how the world works in a value-free way, while a normative theory provides a value-based view about what the world ought to be like or how it ought to work; positive theories express what is, while normative theories express what ought to be. Each of the social sciences, but particularly economics, has advanced both positive theories and normative theories. In economics, positive theories attempt to explain how the economy actually operates and include, for example, the basic supply and demand models of microeconomics as well as the macroeconomic theories of Keynesian economics and the theory of comparative advantage of David Ricardo. Normative economic theories typically propose a goal at which economies should aim. ...

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