When an economist uses objective analysis to find out how the economy actually works, this is

General
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when an economist uses objective analysis to find out how the economy actually works, this is

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When an economist uses objective analysis to find out how the economy actually works, this is

Answer: When an economist uses objective analysis to assess and understand the workings of the economy, this practice is known as positive economics.

Explanation:

1. Definition of Positive Economics

Positive economics involves the objective analysis of economic phenomena. Economists engaged in positive economics aim to describe, explain, and predict economic events and trends without prescribing any particular policies or value judgments. The goal is to understand how the economy actually operates, based on observable facts and data.

Examples of positive economic statements include:

  • “An increase in the supply of money leads to inflation.”
  • “Higher tariffs on imports will reduce the quantity of imported goods.”

2. Distinction from Normative Economics

In contrast to positive economics, normative economics involves statements that include value judgments or prescriptions for how the economy should be. Normative economics is concerned with what ought to be rather than what is.

Examples of normative economic statements include:

  • “The government should increase the minimum wage to improve living standards.”
  • “Taxes should be lowered to promote economic growth.”

3. Methods Used in Positive Economics

Economists use various methods in positive economics to ensure objectivity and accuracy:

  1. Data Collection: Gathering quantitative and qualitative data from reliable sources.
  2. Statistical Analysis: Using statistical tools and models to analyze trends and relationships in the data.
  3. Model Building: Developing theoretical models that can predict economic behavior based on established principles and data.
  4. Hypothesis Testing: Testing hypotheses by comparing predictions with actual data to validate or refute economic theories.

4. Importance of Positive Economics

Positive economics is crucial for several reasons:

  • It helps in understanding the underlying mechanisms of economic phenomena.
  • It provides a factual basis for policy-making, by identifying cause-and-effect relationships.
  • It can predict the economic consequences of various actions and events, allowing for better decision-making in both public and private sectors.

Final Answer:
When an economist uses objective analysis to find out how the economy actually works, this is known as positive economics.