ISLAMIC

ECONOMICs
ASSIGNMENT 1

BY: ANAM KHAN D/O

SAGHEER AHMED
ROLL NO: 04

Q1. Define economics in detail?

DEFINATION OF ECONOMICS:Economics is derived from a Greek word Oikonomikos. If we breaak the word up Oika, means
Home and Nomos, means Management.
Hence economics is the study of how the available resources are managed and organized to deal with the
needs and wants of the society.
A social science that studies how individuals, governments, firms and nations make choices on allocating
scarce resources to satisfy their unlimited wants. Economics can generally be broken down
into: macroeconomics, which concentrates on the behavior of the aggregate economy; and microeconomics,
which focuses on individual consumers.
Economics is often referred to as "the dismal science."

Keynesian Economics Definition:An economic theory of total spending in the economy and its effects on output and inflation. Keynesian
economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to
understand the Great Depression. Keynes advocated increased government expenditures and lower taxes to
stimulate demand and pull the global economy out of the Depression. Subsequently, the term Keynesian
economics was used to refer to the concept that optimal economic performance could be achieved and
economic slumps prevented by influencing aggregate demand through activist stabilization and economic
intervention policies by the government. Keynesian economics is considered to be a demand-side theory
That focuses on changes in the economy over the short run.
Q2. List out methods of Economics?

Methods of Economics
Like other sciences Economics also uses scientific methods. These methods are:

Deductive Method

Inductive Method

Proper Method
Deductive Method:
A Deductive approaches are more commonly associated with quantitative research.
Inductive Method
Inductive approaches are generally associated with qualitative research.
Q3. What is the opportunity cost?

Definition of Opportunity Cost:The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the
Benefits you could have received by taking an alternative action
Q4. Define Inflation and its types with example?

Definition of Inflation:Inflation is the rate at which the general level of prices for goods and services is rising and, consequently,
the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in
order to keep the economy running smoothly.
There are four types of inflation are as follow:
1- Demand pull inflation:-

This type of inflation is a result of strong consumer demand. When many individuals are trying to
purchase the same good, the price will inevitably increase. When this happens across the entire economy
for all goods, it is known as demand-pull inflation.
2- Cost push inflation:Cost-push inflation develops because the higher costs of production factors decreases in aggregate
supply (the amount of total production) in the economy. Because there are fewer goods being produced
(supply weakens) and demand for these goods remains consistent, the prices of finished goods increase
(inflation).
3- Wage push inflation:Wage push inflation is an inflationary spiral that occurs when wages are increased and business must, in
order to pay the higher wages, charge more for their products and/or services. The wage increase, then, is
not as helpful to employees since the cost of goods has also risen. If prices remain increased, workers will
eventually require another wage increase to compensate for the cost of living increase.
4-Imported inflation:The data from these indexes often has a direct impact on the bond markets. The indexes are used to help
measure inflation in products that are traded globally. Bond prices will often decrease when importing
inflation becomes the high, because it erodes the value of the original investment (principal).
Q5. Define Tradeoff with some example?

Definition of Trade off:A trade-off (or tradeoff) is a situation that involves losing one quality or aspect of something in return for
gaining another quality or aspect. if one thing increases, some other thing must decrease. In economics the
term is expressed as opportunity cost, referring to the most preferred alternative given up. A tradeoff, then,
involves a sacrifice that must be made to obtain a certain product, service or experience, rather than others
that could be made or obtained using the same required resources. For a person going to a basketball
game, their opportunity cost is the money and time expended, as compared with the alternative of
watching a particular television program at home.
For example:The concept of a tradeoff is often used to describe situations in everyday life.[4][5] The old saying "do not
put all of your eggs into one basket" implies a tradeoff with respect to spreading risk, as when buys
a mutual fund composed of many stocks rather than only one or a few stocks. Similarly, trash cans can be
small or large. A large trash can does not need to be put out for pickup so often, but it may become so
heavy when full that one risks injury when trying to move it.
In cold climates, mittens serve well to keep the hands warm, but they do not allow the hands to function as
well as do gloves. In a like fashion, warm coats are often bulky and hence difficult to store or even to hang
up.
Q6. Define examples of Macro, Micro economics?

Definition of Macro Economics:The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines
economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross
domestic product, inflation and price levels.

Definition of Micro Economics:The branch of economics that analyzes the market behavior of individual consumers and firms in an
attempt to understand the decision-making process of firms and households. It is concerned with the
interaction between individual buyers and sellers and the factors that influence the choices made by buyers
and sellers. In particular, microeconomics focuses on patterns of supply and demand and the determination

of
output in individual market.

price

and

Q7. Differentiate between microeconomics and macroeconomics?

Microeconomics:Microeconomics is the study of decisions that people and businesses make regarding the allocation of
resources and prices of goods and services. This means also taking into account taxes and regulations
created by governments. Microeconomics focuses on supply and demand and other forces that determine
the price levels seen in the economy. For example, microeconomics would look at how a specific company
could maximize its production and capacity so it could lower prices and better compete in its industry.
(Find out more about microeconomics in. How does government policy impact microeconomics?
Microeconomics' rules flow from a set of compatible laws and theorems, rather than beginning with
empirical study.

Macroeconomics:Macroeconomics, on the other hand, is the field of economics that studies the behavior of the economy as a
whole and not just on specific companies, but entire industries and economies. This looks at economywide phenomena, such as Gross National Product (GDP) and how it is affected by changes in
unemployment, national income, rate of growth, and price levels. For example, macroeconomics would
look at how an increase/decrease in net exports would affect a nation's capital account or how GDP would
be affected by unemployment rate. (To keep reading on this subject, see Macroeconomic Analysis.)

Q4. Plot and interpret graphs of any data you have?