Positive economics is best described as:

• A. It prescribes economic policy.
• B. It evaluates how government policy affects welfare.
• C. It relies on opinion rather than data.
• D. It describes economic phenomena using facts.

Answer: (D)

Positive economics describes how the economy behaves, using facts and data to describe relationships and test predictions. Describing economic phenomena with factual evidence is exactly what this approach does, focusing on what is observable and verifiable rather than on value judgments. The idea of prescribing economic policy belongs to normative analysis, which deals with what should be. Relying on opinion rather than data conflicts with the empirical nature of positive economics, which prioritizes evidence. While studying welfare effects can involve empirical work, the essence of positive economics is describing and explaining what is, based on facts.