Final answer:
Positive economic analysis is a fact-based inquiry into what exists in the economy, while normative economic analysis is a value-laden deliberation about what should be. Examples include analyzing the cost-benefit of a subway system and the advocacy of unemployment benefits based on moral reasoning.
Step-by-step explanation:
Positive economic analysis concerns what is, whereas normative economic analysis embodies subjective feelings about what ought to be. This distinction is fundamental in economics where positive statements are factual assertions about the world and can be tested for validity. Normative statements, however, are value-based opinions and cannot be proven true or false.
For instance, the analysis of a proposed subway system in terms of costs and benefits is an example of positive economic analysis. The conclusion that such a project is financially justifiable based on exceeding benefits represents a decision grounded in facts. Conversely, advocating for extended unemployment compensation based on the belief that it is the responsibility of a wealthy nation to support its less fortunate citizens exemplifies normative economic analysis, rooted in subjective values rather than objective measurement.