economics
This query is : Resolved
25 May 2010
normative economics deals with what?
25 May 2010
Normative means as per the norms i.e. what we consider the right thing. Normative economics (as also in normative law - particularly important in international law) deals with what ought to be, rather than what is (this becomes positive economics).
Progressive taxation (in direct taxes)is an example of normative economics at work. It seems to be in the fitness of things that rich people should be taxed more than not so rich people. Some five decades back in many jurisdictions the tax rate in the highest slab was over 90%! This led to loss of incentive to produce and earn more. Finally the rates were lowered.
Normative economics would suggest the desirable sectors of economy to be encouraged. For example following Gandhian economics (a prime example of normative economics) India still has massive subsidies for Khadi and village industries. The subsidies distort the incentives and it is questionable if the subsidies are contributing as much to economic growth as they should. But normative economists would exclaim that growth is not everything. The subsidies are redistributing the resources in the right direction.
Please notice the expression "right direction"; normative economics is driven by value judgments.
Progressive taxation (in direct taxes)is an example of normative economics at work. It seems to be in the fitness of things that rich people should be taxed more than not so rich people. Some five decades back in many jurisdictions the tax rate in the highest slab was over 90%! This led to loss of incentive to produce and earn more. Finally the rates were lowered.
Normative economics would suggest the desirable sectors of economy to be encouraged. For example following Gandhian economics (a prime example of normative economics) India still has massive subsidies for Khadi and village industries. The subsidies distort the incentives and it is questionable if the subsidies are contributing as much to economic growth as they should. But normative economists would exclaim that growth is not everything. The subsidies are redistributing the resources in the right direction.
Please notice the expression "right direction"; normative economics is driven by value judgments.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- Short Term Capital gain on shares bought and sold after 2018 onwards
- Share accounting-->fifo - capital gain - period as per fifo?
- ITR selection for salaries and capital gain less than L
- Soyabean hsn code and gst rate
- Treatment of Pension ?annuity returns on PMVY
- ITR filing- non tax audit cases- Asstt.Year 2026-2027
- ITR returnFY25-26
- NON- SUBMISSION OF LLP FORM 3
- TDS on payment to CHA as per new section
- Sale of Forign Shares
- INCOME TAX ON REDEVELOPEMENT OF FLAT
- Form 10E u/s 89(1). Need clarification because experts opinions differ !!!!
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
