ECProject B

ECO 220 Page 1

 Intro to macroeconomy
Monday, July 12, 2010
11:38 PM
Microeconomics goals from Islamic perspective
Social justice
○ Is defined as the minimum standard of
living guaranteed by the Islamic state
○ Social justice can be attain by
○ Satisfaction of basic need
○ Implement of zakat
○ Removal sources of hardship
and discomfort
○ Improvement of life quality by
morally and materially
Optimum rate of economic
growth
• The riba is prohibited has
become very limited
• The divine guidance, al-Quran
will guide the Muslims to realize
this objective
• Several strategies to achieve
economic growth
○ Appropriate allocation of
material resources
○ Equitable distribution of
income and wealth
Balance between the needs of
the individual and society
• Islam perceives the needs of
the personal rights if an
individual
• When conflict arrives between
society and individual, the
society is given more attention
than individual needs
Full and efficient employment
of human resources
• Government needs to give
educational opportunities and
vocational training
• Government must monitor the
monetary rewards in
accordance of their work
Microeconomy vs macroeconomy
Microeconomy= Macroeconomy=
Studies individual Studies the aggregate
economics unit such behavior of the entire
as household, firms Aggregate= the sub total of
and government behavior off al individual in
the economy
Macroeconomics goals
Elements of the macroeconomy
Government policies
Monetary policy Price stability Full employment
-the tools used by the gov Fiscal policy • To keep its inflation rate as low as • Economy should use all its available Household Firms
through central bank to • Policy concerning taxes and expenditure. possible resources more efficiently to attain • Own all the factors of production • Buy F.O.d from
control the supply of money • Inflation occur when the overall maximum output
• Purposes- to stabilize economy , • Provide service of f.o.d to gov and firm h/hold to produce
expenditure • Tax from h/hold and firm will be used to public expenditure price increase • Consequences- economics loss to • Receive payment in term of rent, wages, interest and profit and sells good
-used to maintain the overall • Inflation is based average price the society ,loss of self respect,
• Provide g&s to gov
price level, to achieve higher • Inflation can reduce the purchasing • Maximum employment-less 4/6% and h/hold
economics growth, remove power of consumer .
• Pays wages, rent,
fluctuation Contactionary fiscal • >> inflation high, g& s purchased Rest of the world and interest to
- Bring economy out of inflation by decreased. • The foreign sectors
h/hold and gov
increasing taxes and decreasing • Import and export goods • Receive revenue
government expenditure -slows down from sale
Expansionary monetary growth Economic growth
• Curb recession • Economy must operate in full
• Increase amount of money capacity= increase in full
production level
Expansionary fiscal • There are 4 phases- peaks, Government
Equitable distribution of income
-to get out of recession recession, trough, recovery • Collects tax from
] h/hold and firm
• Disparities will create social friction
-reducing taxes, increasing gov • Is measured by full production unit • Provide development and operational purposes
• Taxation is a way to equalize
expenditure per capita • Buys F.O.D from h/hold
• The use of expenditure/fiscal policy
Contractionary monetary -more income, more
• Curb inflation consumption
• Money supply reduced
ECO 220 Page 2
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ECO 220 Page 3