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CHAPTER 1 : INTRODUCTION

1. WHAT IS ECONOMICS
(CONVENTIONAL VS ISLAMIC)
2. WHAT IS THE DIFFERENCE BETWEEN
MACRO & MICRO
3. MACROECONOMIC OBJECTIVE
(CONVENTIONAL VS ISLAMIC)

Tucker CONVENTIONAL Science which studies human behaviour as a relationship between ends & scarce means which have alternative uses – L.DEFINITION OF ECONOMICS Study of how society chooses to allocate its scarce resources to the production of g & s in order to satisfy unlimited wants – Irvin B.Economist . 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 .

Productive resources which to produce g & s are limited ii. Human wants for g & s are unlimited CONVENTIONAL Economy has to decide how to use these resources efficiently in order to attain the max possible satisfaction for the members .2 problems in economy i.

DEFINITION OF ECONOMICS Social science which studies the economics problems of people imbued with islamic values – M A Mannan ISLAMIC Study of how man can achieve al-falah through his control. spiritually in order to achieve the blessing of Allah (al-falah) – Islamics . 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 alFaysal 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.

e guarantee given by Allah ISLAMIC How to achieve al-falah? .All activities & DM are carried out based on philosophic foundation of the Islamic economic system ie i) Hablum min Allah ii) Hablum minan nas iii) r/ship man vs nature & surroundings iv) meaning of his living in this world .Ultimate objective in Islam – to achieve al-Falah Mean – achieve success in this world & hereafter i.

rububiyyah. khalifah.DIFFERENCES : CONVENTIONAL VS ISLAMIC Conventional Islamic Eco obj – to reach max o/put Tends to reach the same obj as with the use of scarce resources conventional but constrained by the islamic ethical philosophy Consumer – max satisfaction Producer – max π Through 4 concept ie tauhid. tazkiyah .

DIFFERENCES : MICRO VS MACROECONOMICS Microeconomics Macroeconomics Part of economics that studies indv units or economic elements in the process of decision making .ie focus on small economic units Studies the economy as a whole or deals with the aggregate Seeks to understand the big picture rather than the detailed of indv choice ↑ in price of sugar National income Production of canned pineapples Economic growth Inflation .

MACROECONOMIC OBJECTIVE DIFFERENCES : CONVENTIONAL VS ISLAMIC Conventional Islamic Achieve full employment Max employment Achieve price stability Achieve equitable distribution of income Achieve social justice & distribution of income & health Achieve economic growth Achieve optimal rate of economic growth Achieve ē in foreign sector Universal education .

meaning .unemployment rate ii) P stability .OBJECTIVE OF CONVENTIOAL MACROECON i) Full Employment .L force .inflation rate .meaning .3 main problems associated with inflation rate a) redistribution effect (real vs fixed income ) b) uncertainty about future price c) money looses its function as medium of exchange .

classification (actual vs potential) .which one is better iv) Economic growth .OBJECTIVE OF CONVENTIOAL MACROECON iii) Equitable of distribution of income .business cycle / trade cycle .meaning & rate .factors contribute to potential economic growth .meaning .2 methods a) tax policy b) expenditure policy .

BOP – surplus vs deficit BUSINESS CYCLE National output Potential output d a c Trade cycle b e a – peak b – recession c – trough d – expansion e – recovery Time / year .meaning .OBJECTIVE OF CONVENTIOAL MACROECON v) ē in foreign sector .

OBJECTIVE OF ISLAMIC MACROECON i) Max job opportunities .same as conventional ii) social justice & distribution of income & health .moral.will not abuse the power & wealth given iii) optimal econ growth . material aspect iv) Education . spiritual.concept al Falah .emphasize more on human capital .equal opportunity regardless their background .