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
- Is this income indian or foreign income?
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Confusion around Form 26QB fields
- RCM INVOICING FROM NOV-2024
- Tds on building rent monthly
- Should I be worried about and rectify reporting Jan,Feb ,March 2024 foreign salary in schedule FA?
- BUYING PROPERTY COULD NOT FILE 26QB
- Gst input for FY 23-24
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
Trending Online Classes
CAclubindia
