Download TOPIC 1 INTRODUCTION TO ECONOMICS

TOPIC 1
INTRODUCTION
TO
ECONOMICS
SITI HAJAR BINTI MD.JANI
UiTM,NEGERI SEMBILAN
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DEFINITION OF
ECONOMICS
Economics is the study of how society
chooses to allocate its scarce resources
to the production of goods and services
in order to satisfy unlimited wants.
Irvin B. Tucker
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Definition of Economics
As “the science which studies human
behaviour as a relationship between
ends and scarce means which have
alternative uses.”
L. Robbins
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Most economists agree that
economics is:
a social-science study which
concerns with human behaviour in
making the decision on how people
use scarce resources in fulfilling their
unlimited wants.
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Definitions from Islamic
Perspective
Islamic economics as a social science studies
which study the economic problems of people
imbued with Islamic values.
M.A. MANNAN
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Definitions from Islamic
Perspective
Islamic economics as a study of how man can
achieve al-falah (complete happiness in this
world and the hereafter)
through his control, ownership and uses
of these worldly resources
based on the concepts of co-operation
and partnership.
AKRAM KHAN
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As a conclusion
Islamic economics can
be defined as;
a study of human activities to obtain,
manage and use the economic
resources according to the
syariah principles for the
betterment of human life
both materially and spiritually
in order to achieve the blessing
of Allah (al-Falah).
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The Ultimate
Macroeconomics
objective in Islam:
“is to achieve al-Falah.”
All human activities and decision-making
is to achieve al-Falah – to achieve the
success in this world and in the hereafter.
- i.e. the guarantee given by Allah s.n.t.
for one’s happiness in this world as well
as in the hereafter.
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How to achieve al-Falah?
 To make sure that all activities and decision
makings are carried out based on the
philosophic foundation of Islamic economic
systems which are based on the Tawhid of:
i) Hablumminaan Allah: the relationship between
man and his Creator Allah s.n.t. – Tawhid
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How to achieve al-Falah?
 To make sure that all activities and decision
makings are carried out based on the philosophic
foundation of Islamic economic systems which
are based on:
i) Hablumminaan Allah: the relationship between
man and his Creator Allah s.n.t. – Tawhid
ii) Hablumminannaas: the relationship between
man and his fellow men.
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How to achieve al-Falah?
 To make sure that all activities and decision
makings are carried out based on the philosophic
foundation of Islamic economic systems which
are based on:
i) Hablumminaan Allah: the relationship between
man and his Creator Allah s.n.t. – Tawhid
ii) Hablumminannaas: the relationship between man
and his fellow men.
iii) The relationship between man and the Nature and
his surroundings.
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How to achieve al-Falah?
 To make sure that all activities and decision
makings are carried out based on:
the philosophic foundation of Islamic economic
systems which are based on:
i) Hablumminaan Allah: the relationship between
man and his Creator Allah s.n.t. – Tawhid
ii) Hablumminannaas: the relationship between man
and his fellow men.
iii)The relationship between man and the Nature and
his surroundings.
iv)The meaning of his living in this world.
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i) Hablumminaan Allah:
the relationship between man and his Creator
Allah s.n.t.
 through the concept of Tawhid - the unity
of thought or the unity and sovereignty of
Allah s.n.t. – in Islam sovereignty in all matters
belongs to Allah and to none else – a belief in an
ultimate sovereignty of God.
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i) Hablumminaan Allah:
the relationship between man and his Creator
Allah s.n.t.
 through the concept of Tawhid - the unity
of thought or the unity and sovereignty of
Allah s.n.t. – in Islam sovereignty in all matters
belongs to Allah and to none else – a belief in an
ultimate sovereignty of God.
 the belief and understanding that Allah is
the creator, the Lord, the Sovereign, the
Sustainer and the Giver.
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i) Hablumminaan Allah:
the relationship between man and his Creator
Allah s.n.t.
 through the concept of Tawhid - the unity
of thought or the unity and sovereignty of
Allah s.n.t. – in Islam sovereignty in all matters
belongs to Allah and to none else – a belief in an
ultimate sovereignty of God.
 the belief and understanding that Allah is
the creator, the Lord, the Sovereign, the
Sustainer and the Giver.
 to perform the duties and responsibilities
as a vicegerent of Allah s.n.t. – take good
care and use of economic resources.
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i) Hablumminaan Allah:
the relationship between man and his Creator
Allah s.n.t.
 through the concept of Tawhid - the unity
of thought or the unity and sovereignty of
Allah s.n.t. – in Islam sovereignty in all matters
belongs to Allah and to none else – a belief in an
ultimate sovereignty of God.
 the belief and understanding that Allah is
the creator, the Lord, the Sovereign, the
Sustainer and the Giver.
 to perform the duties and responsibilities
as a vicegerent of Allah s.n.t. – take good
care and use of economic resources.
 to totally submitting himself to Allah s.n.t.
by diligently obeying His rules and
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regulations.
ii) Hablumminannaas
the relationship between man and his fellow
men.
 the responsibility of individuals to his
society through the zakat.
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ii) Hablumminannaas
the relationship between man and his fellow
men.
 the responsibility of individuals to his
society through the zakat.
Not to be selfish – profit earning only
to a specific sufficient profitability
(Responsible Profit earnings).
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ii) Hablumminannaas
the relationship between man and his fellow
men.
 the responsibility of individuals to his
society through the zakat.
Not to be selfish – profit earning only
to a specific sufficient profitability
(Responsible Profit earnings).
 a balance between the requirement
of material life and the well-being of
the society.
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iii) The relationship between man
and the Nature and his
surroundings
Production activity – must consider with
environmental effects and taken into
account the economic welfare of the
consumers.
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iii) The relationship between man
and the Nature and his
surroundings
Production activity – must consider with
environmental effects and taken into
account the economic welfare of the
consumers.
To ensure no wastage of resources.
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iii) The relationship between man
and the Nature and his
surroundings
Production activity – must consider with
environmental effects and taken into
account the economic welfare of the
consumers.
To ensure no wastage of resources.
No navigation of resources to the
production of unsatisfactory,
low quality and forbidden goods.
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iv) The meaning of his
living in this world
Fi-sabillillah.
- to achieve the highest moral and
spiritual benefits for all concerned.
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What’s the difference
between the conventional
and Islamic
macroeconomics
objectives?
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DIFFERENCES BETWEEN:
CONVENTIONAL AND ISLAMIC
MACROECONOMICS
OBJECTIVES.
Conventional economics objective is to
reach maximum output with
the use of scarce resources.
Islamic economics tend to reach the
same objective but is constrained
by the Islamic ethical philosophy.
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Conventional
Macroeconomics Objectives
are to achieve:
i) High and stable economic growth – to
increase output.
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Conventional
Macroeconomics Objectives
are to achieve:
i) High and stable economic growth – to
maximise output.
ii) Full-employment – low unemployment
and high productivity.
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Conventional
Macroeconomics Objectives
are to achieve:
i) High and stable economic growth – to
maximise output.
ii) Full-employment – low unemployment
and high productivity.
iii) Price stability – to keep inflation low
and stable value of money.
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Conventional
Macroeconomics Objectives
are to achieve:
i) High and stable economic growth – to
maximise output.
ii) Full-employment – low unemployment
and high productivity.
iii) Price stability – to keep inflation low
and stable value of money.
iv) Favourable balance of payment.
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Fundamental
Objectives in Islamic
economics are:
1. Social Justice
One will not abuse the power and wealth given
to him for the justice of the society;
since we are only the khalifah of Allah
granted and being trusted to the use of
ownership of the bounties given by Allah.
Surah Taaha; 20:6, “He’s the one who own the
bounties whatever on this earth and in the
outerspace (sky) or in between or down beneath
the wet earth,” for the welfare and justice of the
society.
and to perform his duties to pay the zakat
as a voluntary duty for social justice.
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2. Universal education
make use of the education and knowledge
for the betterment of human life.
Higher education and skills to support
productive human capital.
Every Muslims were to be given the same
chance to acquire education.
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3. High rate of economic growth
make use all capitals and resources
which are scarce for the growth of the
economy.
also to consider the development of spiritual aspects of
a man’s life.
The qualitative aspects of the economic growth
differentiate a Muslims country’s growth path with
others - to include all the moral, spiritual and material
aspects of human well being.
to fulfill the society’s needs and to produce goods
according to the hierarchy of consumption in Islam:
Dharuriyat
Hajiyat
Kamaliyat
Tarafiat (to be avoided)
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4. Maximisation of job
opportunities.
to reach the best efficiency in the
production
and
create
high
employment.
in needs for social justice is to produce
goods at the maximising revenue with
high numbers of job opportunities.
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Conclusion……
the difference between the objectives of an
Islamic country to others is the pursuit of the
conventional objectives to that of a Muslim
country which is guided and constrained by
its own ethical and Islamic philosophy.
Islam as an ad-Deen that is a complete
constitution that organizes all aspects
of life and relationships based on the
principle of Tauhid and believe that
Allah is the only one.
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DEFINITIONS OF
MICRO AND MACRO ECONOMICS
The words :
“Micro” means small and
“Macro” means large
- meaning that comes from the Greek words.
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MICROECONOMICS
is part of economics that studies
individual units or economic elements in
the process of making decision,
such as the decision made by the
households, firms, government and etc.
as individual units in an economy.
For example, a study to look at the
interaction between the producers and
consumers in a market.
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Examples of
MICROECONOMICS Study
Issues like the demand and supply of cars
in the market in Malaysia,
the production of canned pineapples by the
farmers in Johor;
the increase in price of sugar after a
shortage of sugar cane production in Perlis,
the increase in price of cloths after the
government announcement of 10% bonuses
to the public servants.
Thus, all issues here focuses on the study
of a particular specific individuals or
elements towards its behaviuor and factors
concern.
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MACROECONOMICS
studies the economy as a whole or
deals with the economic aggregates.
It concerns with the study of all
individual units or economic elements
together in the process of making
decision in an economy as a whole.
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Examples of
Macroeconomics issues:
national
income, economic
growth,
inflation,
unemployment,
government
deficit budget, monetary policy, balance of
payment, international trade and etc.
It focuses on viewing at the general
structure of the aggregate components of
elements in the economy as a whole.
For example, the effect of aggregate
expenditure on general prices and
national income in the economy as a
whole.
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Thank You
for lend me your ears.
THAT’S ALL
FOR TODAY
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