Which branch focuses on advising how things ought to be done?

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

Answer: (B)

Describing what ought to be done is about value judgments and policy prescriptions. Normative economics focuses on how the economy should work and what actions policymakers should take, based on what people consider desirable. It tackles questions like what policies would be best to achieve societal goals, rather than just analyzing what will happen if policies are a certain way. For example, arguing that taxes should be increased to fund public services is a normative claim, because it prescribes a course of action based on value judgments. Positive economics, in contrast, describes and explains how the economy actually behaves and tests hypotheses with data, without making value-laden recommendations. The other terms refer to broader ideas—the field of study and the economic system itself—and do not denote the branch that provides guidance on what should be done.