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HOUSEHOLDS:
WORK,
CONSUME
AND SAVING
Contents
Household and supply of labor
Factor Market
HOUSEHOLD FIRMS
1 Consumption (C)
Factor Market
•Work with honesty and responsibility.
•work without delinquent in order to maximize
production and avoid waste of resources.
•earns income for consume and invest in
profitable funds that could stimulate the
LABOR (income) economic growth.
CONSUMER
•use income from labor services to buy
HOUSEHOLD goods that produced in economy.
•Demand only for lawful goods. FIRMS
•Exercise the consumer right by reporting
any fraud in production/low quality of
goods.
•Implement the theory of hierarchy of
needs while shopping to avoid wastage.
CONSUMER
Saving
Product Market Investment
(S) And (I)
INVESTOR Financial Market
•INVESTOR- invest only in shariah-compliant funds. 2
•Avoid freezing of property
•The fund manager conducts a purification process on the impermissible income generated. The impure income is distributed to
charity/pay zakat.
Islamic Household Conventional Household
1. Principle of Halal:
A Muslim has been enjoined upon by Islam to eat only
that food which is ‘Halal’ (lawful and permitted) and
not to take that which is ‘Haram’ (unlawful and
forbidden).
2. Principle of Cleanliness and Wholesomeness
The Qur’an enjoins upon mankind: “O mankind ! Eat of
that which is lawful and wholesome in the earth, and
follow not the footsteps of devil. Lo! he is an open
enemy for you” (2:168).
3. Principle of Moderation:
The principle of moderation in consumption means that
one should take the food and drinks with moderation
and avoid excess because excess of intake is harmful
to health.
Case Study
Consumers are often faced with a conflict
between the needs, benefits, product
and moment in making choice to buy
goods. Student should use the hierarchy
of need or/and the principle of
moderation in other to explain the conflict
between needs, benefit, product and
moment in making decision or respond to
the above advertisement.
Household and savings
SI = P0(i)(n)
= $1,000(.07)(2)
=$140
Simple Interest Formula: Future Value
What is the Future Value of the Deposit?
FV = P0 + SI
= $1,000 + $140
= $1,140
Future
Value is the value at some future time of a
present amount of money, or a series of
payments, evaluated at a given interest rate.
Household and savings
In Islamic economics, the spending behaviour of a
household is expected to influence their saving
behaviour as well.