Answer :

In principle, there are more than just one way to solve the central problems of an economy. The mechanisms are different because of the different types of analysis they use, and can benefit the country in different ways.


Normative economic analysis involves evaluating whether these mechanisms are desirable or not. It basically tries to evaluate the mechanism instead of simply figuring out how it functions. It offers ideologically prescriptive judgments towards economic development, investment projects, statements and scenarios. It does not rely on objective data like positive economics does. Instead, it concerns itself with value judgments and expressing ideological judgments regarding policy changes.


Example – cutting taxes in half to increase disposable income levels.


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