Which branch applies value judgments to data to advise how things ought to be done?

• A. Positive economics
• B. Economics
• C. Economy
• D. Normative economics

Answer: (D)

Normative economics is the branch that uses value judgments to interpret data and advise what actions should be taken. It prescribes policies based on what is considered desirable, such as promoting equality or welfare. For example, it would argue that taxes should be increased on high earners to fund social programs. This differs from positive economics, which describes and predicts economic outcomes without prescribing what ought to be done. Economics as a field encompasses both approaches, while the economy refers to the actual system of production and exchange.