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TOPICINTRODUCTION

TO

ECONOMICS

SITI HAJAR BINTI MD.JANIUiTM,NEGERI SEMBILAN

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DEFINITION OF

ECONOMICSEconomics is the study of how society

chooses to allocateits scarce resources

to the production of goods and servicesin order to satisfy unlimited wants.

Irvin B. Tucker

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Definition of Economics

As the science which studies human

behaviouras a relationship betweenends and scarcemeans which have

alternative uses.

L. Robbins

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Most economists agree that

economics is:

a social-science study which

concerns with human behaviourin

making the decis ionon how peopleuse sc rce resourcesin fulfilling theirunlimited wants.

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Definitions from Islamic

Perspective

Islamic economics as a socialscience studieswhich study theeconomic problems of peopleimbued with Islamic values.

M.A. MANNAN

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Definitions from Islamic

Perspective

Islamic economics as a study ofhow man can achieve al-falah(complete happiness in this

world and the hereafter)through his control,

ownership and uses of these

worldly resourcesbased on the concepts of

co-operation

andartnershi .

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As a conclusion

Islamic economics can

be defined as;a study of human activitiesto obtain,

manage and use the economic

resourcesaccording to the

syariah principlesfor the

betterment of human life

both materially and spirituallyin 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-makingis to achieve al-Falahto achieve thesuccess in this world and in the hereafter.

- i.e. the guarantee given by Allah s.n.t.for ones happiness in this worldas wellas in the hereafter.

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How to achieve al-Falah?

To make sure that all activities and decisionmakings are carried out based on the

philosophic foundation of Islamic economic

systemswhich 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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To make sure that all activities and decisionmakings are carried out based on thephilosophic

foundation of Islamic economic systemswhich

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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To make sure that all activities and decision

makings are carried out based on thephilosophicfoundation of Islamic economic systemswhichare based on:

i) Hablumminaan Allah: the relationship betweenman and his Creator Allah s.n.t.Tawhid

ii) Hablumminannaas: the relationship between manand his fellow men.

iii) The relationship between man and the Nature and

his surroundings.

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To make sure that all activities and decision

makingsare carried out based on:thephilosophic foundation of Islamic economicsystemswhich are based on:

i) Hablumminaan Allah: the relationship betweenman and his Creator Allah s.n.t.Tawhid

ii) Hablumminannaas: the relationship between manand his fellow men.

iii)The relationship between man and the Nature andhis 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 unityof thought or theunity and sovereignty of

Allah s.n.t.in Islam sovereignty in allmatters belongs to Allah and to none

elsea belief in an ultimatesovereignty of God.

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the relationship between man and his CreatorAllah s.n.t.

through the concept of Tawhid- the unityof thought or theunity and sovereignty of

Allah s.n.t.in Islam sovereignty in allmatters belongs to Allah and to noneelsea belief in an ultimatesovereignty of God.

the belief and understanding thatAllah is

the creator, the Lord, the Sovereign, theSustainer and the Giver.

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the relationship between man and his Creator

Allah s.n.t. through the concept of Tawhid- the unityof thought or theunity and sovereignty of

Allah s.n.t.in Islam sovereignty in allmatters belongs to Allah and to none

elsea belief in an ultimatesovereignty of God.

the belief and understanding thatAllah isthe creator, the Lord, the Sovereign, the

Sustainer and the Giver. to perform the duties and responsibilitiesas a vicegerent of Allahs.n.t.take goodcare 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 theunity and sovereignty ofAllah s.n.t.in Islam sovereignty in allmatters belongs to Allah and to noneelsea belief in an ultimatesovereignty of God.

the belief and understanding thatAllah isthe creator, the Lord, the Sovereign, the

Sustainer and the Giver. to perform the duties and responsibilities

as a vicegerent of Allahs.n.t.take goodcare and use of economic resources.

to totally submitting himself to Allah s.n.t.by diligently obeying His rules and

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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 fellowmen.

the responsibility of individuals to his

society through the zakat.Not to be selfishprofit earning only

to a specific sufficient profitability(Responsible Profit earnings).

a balance between the requirementof material life and the well-being ofthe society.

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iii) The relationship between man

and the Nature and his

surroundings

Production activitymust consider with

environmental effectsand taken into

account the economic welfareof theconsumers.

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surroundings

Production activitymust consider with

environmental effectsand taken into


To ensure no wastage of resources.

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surroundingsProduction activitymust consider withenvironmental effectsand taken into


To ensure no wastage of resources.

No navigation of resources to theproduction of unsatisfactory,

low quality and forbidden goods.

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iv) The meaning of his

living in this world

Fi-sabillillah.

- to achievethe highest moral andspiritual benefits for all concerned.

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Whats the difference

between the conventionaland Islamic

macroeconomics

objectives?

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DIFFERENCES BETWEEN:

CONVENTIONAL AND ISLAMIC

MACROECONOMICSOBJECTIVES.

Conventional economics objective is to

reach maximum outputwiththe use of scarce resources.

Islamic economics tend to reach thesame objectivebut is constrained

by the Islamic ethical philosophy.

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Conventional

Macroeconomics Objectives

are to achieve:

i) High and stable economic growthto

increase output.

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Conventional


are to achieve:


maximise output.ii) Full-employmentlow unemployment

and high productivity.

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Conventional


are to achieve:i) High and stable economic growthto

maximise output.

ii) Full-employmentlow unemploymentand high productivity.

iii) Price stabilityto keep inflation low

and stable value of money.

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Conventional


are to achieve:


maximise output.

ii) Full-employmentlow unemployment

and high productivity.

iii) Price stabilityto keep inflation low

and stable value of money.iv) Favourable balance of payment.

F ndamental

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Fundamental

Objectives in Islamic

economics are:

1. Social Justice

One will not abuse the powerand wealthgivento him for the justice of the society;

since we are only the khalifah of Allahgranted and being trusted to the use ofownership of the bounties given by Allah.Surah Taaha; 20:6, Hes the one who own thebounties whatever on this earth and in the

outerspace (sky) or in between or down beneaththe wet earth, for the welfare and justice of thesociety.

and to perform his duties to pay the zakatas 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 scarcefor the growth of theeconomy.

also to consider the development of spiritual aspects ofa manslife.

The qual i tat ive aspects of the economic growth

differentiate a Muslims countrys growth path withothers - to include all the moral, spiritual and materialaspects of human well being.

to fulfill the societys needs and to produce goodsaccording to thehierarchy of consumption in Islam:

DharuriyatHajiyat

Kamaliyat

Tarafiat (to be avoided)

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4. Maximisation of job

opportunities.

to reach the best efficiency in the

production and create highemployment.

in needs for social justiceis to produce

goods at the maximising revenue withhigh numbers of job opportunities.

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Conclusion

the differencebetween the objectives of anIslamic country to others is the pursuit of theconventional objectives to that of a Muslimcountry which is guided and constrained byits own ethical and Islamic philosophy.

Islam as an ad-Deenthat is a completeconstitution that organizes all aspects

of life and relationshipsbased on theprinciple of Tauhid and believe that

Allah is the only one.

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The words :

Micromeans smalland

Macromeans large

- meaning that comes from the Greek words.

DEFINITIONS OF

MICRO AND MACRO ECONOMICS

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MICROECONOMICSis part of economics that studies

individual unitsor economic elementsinthe process of making decision,

such as the decision made by thehouseholds, firms, governmentand etc.

as individual unitsin an economy.

For example, a study to look at the

interaction between the producers and

consumersin a market.

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Examples of

MICROECONOMICS Study

Issues like the demand and supply of carsin the market in Malaysia,

the production of canned pineapplesby thefarmers in Johor;

the increase in price of sugar after ashortage of sugar cane production in Perlis,

the increase in price of cloths after thegovernment announcement of 10% bonuses

to the public servants.Thus, all issues here focuses on the studyof a particular specific individuals orelements 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.

Examples of

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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 generalstructureof the aggregate components of

elementsin the economy as a whole.

For example, the effect of aggregateexpenditure on general prices and

national income in the economy as a

whole.

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Thank You

for lend me your ears.

THATS ALL

FOR TODAY

azie-eco211-chap-12007

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