chap 1 miza
DESCRIPTION
EkonomiTRANSCRIPT
CHAPTER 1 : INTRODUCTION
1. WHAT IS ECONOMICS (CONVENTIONAL VS ISLAMIC)
2. WHAT IS THE DIFFERENCE BETWEEN MACRO & MICRO
3. MACROECONOMIC OBJECTIVE (CONVENTIONAL VS ISLAMIC)
DEFINITION OF ECONOMICS
CONVENTIONAL
Study of how society chooses to allocate its scarce resources to the production of g & s in order to satisfy unlimited wants – Irvin B. Tucker
Science which studies human behaviour as a relationship between ends & scarce means which have alternative uses – L. Robbins
Study of man in everyday business life – Alfred Marshal
Social-science study as it deals with human behaviour in making the decision on how people use scarce resources in fulfilling their unlimited wants - Economist
CONVENTIONAL
2 problems in economyi. Productive resources which to
produce g & s are limitedii. Human wants for g & s are
unlimited
Economy has to decide how to use these resources efficiently in order to attain the max possible satisfaction for the members
DEFINITION OF ECONOMICS
ISLAMIC
Social science which studies the economics problems of people imbued with islamic values – M A Mannan
Study of how man can achieve al-falah through his control, ownership & uses of these worldly resources based on the concepts of cooperation & partnership – Akram Khan
A study used by man to fulfill his as well as society’s wants according to syariah principle – Amir Mohd al-Faysal as Saud
A study of human activities for obtain, manage & use the economic resources according to the syariah principles for the betterment of human life both materially, spiritually in order to achieve the blessing of Allah (al-falah) – Islamics
ISLAMIC
Ultimate objective in Islam – to achieve al-Falah Mean – achieve success in this world & hereafter
i.e guarantee given by Allah
How to achieve al-falah?- All activities & DM are carried out based on
philosophic foundation of the Islamic economic system ie
i) Hablum min Allahii) Hablum minan nasiii) r/ship man vs nature & surroundingsiv) meaning of his living in this world
DIFFERENCES : CONVENTIONAL VS ISLAMIC
ConventionalConventional IslamicIslamic
Eco obj – to reach max o/put Eco obj – to reach max o/put with the use of scarce resourceswith the use of scarce resources
Tends to reach the same obj as Tends to reach the same obj as conventional but constrained conventional but constrained by the islamic ethical by the islamic ethical philosophyphilosophy
Consumer – max satisfactionConsumer – max satisfaction
Producer – max Producer – max ππ
Through 4 concept ie tauhid, Through 4 concept ie tauhid, rububiyyah, khalifah, tazkiyahrububiyyah, khalifah, tazkiyah
DIFFERENCES : MICRO VS MACROECONOMICS
MicroeconomicsMicroeconomics MacroeconomicsMacroeconomics
Part of economics that studies Part of economics that studies indv units or economic elements indv units or economic elements in the process of decision in the process of decision making ,ie focus on small making ,ie focus on small economic unitseconomic units
Studies the economy as a whole Studies the economy as a whole or deals with the aggregateor deals with the aggregate
Seeks to understand the big Seeks to understand the big picture rather than the detailed picture rather than the detailed of indv choiceof indv choice
↑ ↑ in price of sugarin price of sugar
Production of canned pineapplesProduction of canned pineapples
National incomeNational income
Economic growthEconomic growth
InflationInflation
MACROECONOMIC OBJECTIVEDIFFERENCES : CONVENTIONAL VS ISLAMIC
ConventionalConventional IslamicIslamic
Achieve full employmentAchieve full employment Max employmentMax employment
Achieve price stability Achieve price stability
Achieve equitable distribution Achieve equitable distribution of incomeof income
Achieve social justice & Achieve social justice & distribution of income & healthdistribution of income & health
Achieve economic growthAchieve economic growth Achieve optimal rate of Achieve optimal rate of economic growtheconomic growth
Achieve Achieve ē in foreign sectorē in foreign sector Universal educationUniversal education
OBJECTIVE OF CONVENTIOAL MACROECON
i) Full Employment- meaning- L force- unemployment rate
ii) P stability- meaning- inflation rate - 3 main problems associated with inflation rate
a) redistribution effect (real vs fixed income )b) uncertainty about future pricec) money looses its function as medium of exchange
OBJECTIVE OF CONVENTIOAL MACROECON
iii) Equitable of distribution of income - meaning - 2 methods
a) tax policyb) expenditure policy
- which one is better
iv) Economic growth - meaning & rate - classification (actual vs potential) - factors contribute to potential economic growth - business cycle / trade cycle
OBJECTIVE OF CONVENTIOAL MACROECON
v) ē in foreign sector - meaning - BOP – surplus vs deficit
a
c
d
Time / year
Potential output
a – peakb – recessionc – troughd – expansione – recovery
Trade cycle
Nationaloutput
b e
BUSINESS CYCLE
OBJECTIVE OF ISLAMIC MACROECON
i) Max job opportunities - same as conventional
ii) social justice & distribution of income & health - concept al Falah
- will not abuse the power & wealth given
iii) optimal econ growth - emphasize more on human capital - moral, spiritual, material aspect
iv) Education - equal opportunity regardless their background