ICSE Class 10 Answered

Positive and normative are the two aspects of modern finance. Classical economists believed the market mechanism and they dealt the theory of public finance only with public revenue, public expenditure and public debt without considering their impact on welfare. This aspect is called the positive aspect of public finance.

Welfare economists strongly believed in welfare aspects of public revenue and public expenditure. No government can afford to tax the people without ensuring economic welfare. Hence, they try to transfer incomes from rich to the poor through fiscal operations. This aspect is called normative aspect of public finance.