The study of how economic processes work. As it is concerned with what actually happens, it needs a lot of institutional and statistical information. Positive economics is contrasted with normative economics, which is concerned with how the economy ought to be run. Positive economics also analyses how economic processes would work given certain assumptions about institutional conditions, for example the existence of monopoly, or about motivation, for example profit maximization. To analyse what would happen given certain assumptions, positive economics uses models, which are stylized and simplified representations of the real world. Economic policy needs to be based on both positive and normative economics. Normative economics helps determine the aims of policy, but competence at positive economics is essential for policy-makers, since any policy, however laudable its objectives, is bound to fail if it is not capable of producing the results aimed at.

• ratio
• rational expectations
• rationality
• rationalization
• rational number
• rationing
• Rawlsian social welfare function
• raw materials
• R&D
• reaction curve
• Reaganomics
• real balance effect
• real balances
• real business cycle
• real costs
• real exchange rate
• real GDP
• real GNP
• realignment of exchange rates
• real income
• real interest rate
• real money supply
• real national income
• real number
• real terms