Answer to Question #178032 in Microeconomics for Abdus

Question

If you become the finance minister of Pakistan how would you use your economic advisors positive views or normative views and which views would be more important for your economic decision making

Answer 1

i) The majority of public policy is focused on a blend of positive and normative views. Since no side can explicitly prove their correctness. In order to formulate a country's economic policies, both positive and normative economic statements are needed.

As a policymaker, I would try to figure out why economists provide contradictory advice.

I believe that economics should only be normative when the objective function is given externally; that is, if the government says, "We want economic development," economists should tell the government what to do. If the government, on the other hand, says, "We want to balance growth and stability," economists can only advise me on what to do after the government has agreed on relative model or plans we are seeking so that i structure these views to conform with the directives.

These views when used in combination they can help develop, produce, and adopt new ideas and theories for various economic goals .

ii) I would choose normative views mostly for important decision making. This is because they concentrate on opinion-oriented, prescriptive, value judgments, and "what should be" statements. Observations show that normative economic arguments are often used in conversations around public policies in this case Pakistan.

Despite the fact that normative statements are generalized and subjective in nature, they serve as necessary portals for creative thought. Such viewpoints can serve as the basis for any possible reforms that could fully transform the nation. However, normative views cannot be used as the sole basis for making important economic decisions.