Economic Theories of Production and Distribution
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What is the primary focus of reforms in the theories of production and distribution discussed in the content?

  • Socialism
  • Islamic framework (correct)
  • Communism
  • Capitalism

    • In a capitalistic economic system, the state controls trade and industry for profit.

    False

    List the four factors of production mentioned in the text.

    Capital, Labor, Land, and Natural Resources

    In a capitalistic economy, wealth is distributed only among those who have taken part in _______.

    <p>producing it</p> Signup and view all the answers

    Match the factor of production with its definition:

    <p>Capital = Produced means of production Labor = Exertion on the part of man Land = Natural resources Wealth distribution = Based on contribution to production</p> Signup and view all the answers

    Which statement best describes capital in the context of production?

    <p>It includes produced means of production.</p> Signup and view all the answers

    Semi-finished goods can be used as inputs in a production process.

    <p>True</p> Signup and view all the answers

    What is the role of private property rights in a capitalistic economy?

    <p>They provide individuals the freedom to produce goods and services.</p> Signup and view all the answers

    What is the primary form of compensation for land in the Islamic economic perspective?

    <p>Rent</p> Signup and view all the answers

    In socialism, private property is a key concept.

    <p>False</p> Signup and view all the answers

    What do laborers receive as compensation for their work in the Islamic economic system?

    <p>Wages</p> Signup and view all the answers

    According to Islamic principles, all things in the universe are considered the property of _____ .

    <p>Allah</p> Signup and view all the answers

    Match the following factors of production with their correct characteristics:

    <p>Land = Means of production that can be leased Labor = Human exertion and planning Capital = Investment required for entrepreneurial activities Entrepreneurship = Bringing together various factors of production</p> Signup and view all the answers

    In the Islamic economic system, what can no individual claim ownership over?

    <p>Natural resources</p> Signup and view all the answers

    An entrepreneur is not required to pay for labor and land utilization in an Islamic economy.

    <p>False</p> Signup and view all the answers

    What is the key distinction between the Islamic economy and socialist economy regarding the ownership of wealth?

    <p>Islamic economy acknowledges private property whereas socialism does not.</p> Signup and view all the answers

    What does the term 'Riba' refer to in the context of the prohibition mentioned in the Quran?

    <p>Usury or interest</p> Signup and view all the answers

    The prohibition of riba for Muslims was clearly mentioned in the first verse revealed regarding this topic.

    <p>False</p> Signup and view all the answers

    In which year after Hijra was the verse prohibiting riba revealed?

    <p>2nd year after Hijra</p> Signup and view all the answers

    Those who take riba will not stand as those driven crazy by the _____ of the demon.

    <p>touch</p> Signup and view all the answers

    According to one of the verses, what is the consequence for those who revert back to taking riba?

    <p>They will be the people of Fire</p> Signup and view all the answers

    Match the following concepts with their descriptions:

    <p>Riba = Usury or interest Salah = Prayer Zakah = Charity Disbelievers = People of Fire according to verses</p> Signup and view all the answers

    What will happen to those who believe and do good deeds according to the Quran?

    <p>They will have their reward with their Lord, and there is no fear for them, nor shall they grieve.</p> Signup and view all the answers

    The Quran allows for riba because it considers it similar to sale.

    <p>False</p> Signup and view all the answers

    What was the purpose of the government's order in 1981 regarding banks?

    <p>To offer separate counters for deposit on PLS basis.</p> Signup and view all the answers

    The Federal Sharia’h Council declared the banking procedures adopted in 1985 as Islamic.

    <p>False</p> Signup and view all the answers

    What major event occurred in 1999 regarding interest banking laws in Pakistan?

    <p>The Sharia’h Appellate Bench of the Supreme Court rejected the appeals and directed all laws on interest banking to be ceased.</p> Signup and view all the answers

    The State Bank of Pakistan issued its first ever Islamic banking license to __________ in 2002.

    <p>Meezan Bank Limited</p> Signup and view all the answers

    Match the following key events related to Islamic banking in Pakistan with their respective years:

    <p>Issuance of Islamic banking license to Meezan Bank = 2002 Federal Sharia’h Council declaration = 1991 Government's order for PLS counters = 1981 Sharia'h Appellate Bench decision = 1999</p> Signup and view all the answers

    What setback occurred in the movement towards an interest-free economy in August 1985?

    <p>Banks were allowed to invest PLS deposits in interest-bearing securities.</p> Signup and view all the answers

    Islamic banks in Pakistan operate strictly under Sharia’h laws.

    <p>True</p> Signup and view all the answers

    What are the three strategies developed by the State Bank of Pakistan for Islamic banking?

    <ol> <li>Establishing full-fledged Islamic banks. 2. Setting up subsidiaries of Islamic banks. 3. Opening stand-alone Islamic banking branches by conventional banks.</li> </ol> Signup and view all the answers

    What did the Prophet (PBUH) say about the consequences of consuming riba?

    <p>It is equivalent to committing adultery thirty-six times.</p> Signup and view all the answers

    According to the Hadiths, the witnesses to a riba transaction are considered guiltless.

    <p>False</p> Signup and view all the answers

    Name one category of riba classified by shariah scholars.

    <p>Riba Al Nasiyah or Riba Al Fadl</p> Signup and view all the answers

    Riba is defined as any ______, addition or increase over loan or debt which is predetermined.

    <p>excess</p> Signup and view all the answers

    Match the following narrations with their meanings:

    <p>Cursed all parties involved = Hadith of Jabir (R.A) Worst than sinning with one's mother = Hadith of Abu Hurayrah (R.A) Riba prevalent among mankind = Hadith of Abu Hurayrah (R.A) Accepting favors is discouraged = Hadith of Anas ibn Malik (R.A)</p> Signup and view all the answers

    What did the Prophet (PBUH) imply about the acceptance of gifts while lending?

    <p>It should only be acceptable if both parties are accustomed to it.</p> Signup and view all the answers

    Riba Al Nasiyah refers to any excess received over the principal in a height of a financial transaction.

    <p>True</p> Signup and view all the answers

    The least serious segment of riba is equivalent to a man committing ______ with his own mother.

    <p>adultery</p> Signup and view all the answers

    What is Riba Al Quran primarily associated with?

    <p>Loan transactions with predetermined excess</p> Signup and view all the answers

    Riba is considered permissible in all loan agreements.

    <p>False</p> Signup and view all the answers

    What does Imam Abu Bakr Jassas Razi define as Riba An Nasiyah?

    <p>A loan with a specified repayment period and an excess amount predetermined.</p> Signup and view all the answers

    Surah al-Baqarah renders certain transactions involving ______ as haram.

    <p>Riba</p> Signup and view all the answers

    Match the following terms with their descriptions:

    <p>Riba Al Quran = Primary form of interest prohibited by the Quran Riba Al Jahiliyyah = Interest from the dark ages prior to Islam Riba An Nasiyah = Loan with predetermined excess Surah al-Baqarah = Chapter that discusses the prohibition of Riba</p> Signup and view all the answers

    According to Surah al-Baqarah, what happens if one does not give up Riba?

    <p>They will receive a declaration of war from Allah</p> Signup and view all the answers

    The Quran allows excess returns from sale transactions.

    <p>True</p> Signup and view all the answers

    What advice does the Quran give regarding dealing with someone in misery?

    <p>To allow deferment until their ease or to forgo the debt as alms.</p> Signup and view all the answers

    Study Notes

    Islamic Economic System

    • Sharia'h is a system of divine commands, governing all aspects of human life
    • Islamic economics aims for equitable wealth distribution
    • Wealth & property are viewed as entrusted by Allah, needing fair use

    Factors of Production in Islam

    • Capitalistic view: trade & industry controlled by private owners for profit
    • Socialistic view: ownership & resources regulated by the state for equality
    • Islamic view: Human beings have right to wealth from production but Allah has ultimate right.
    • Wealth is considered a trust given by Allah

    Islamic Banking

    • Islamic banking operates without interest (riba)
    • Popular forms include Mudarabah, Musharakah, and Murabaha
    • Islamic banks strive to be socially responsible & ethically sound

    Riba (Interest)

    • Riba is any excess given or taken with loan without consideration.
    • Prohibition is gradual in Quran, with verses forbidding excess on loan
    • Hadith (teachings of Prophet Muhammad) further elaborates prohibition of all forms of riba

    Islamic Contracts

    • Unilateral promise (Wa'da): One party makes a promise, legally enforceable.
    • Bilateral promise (Muwa'adah): Mutually binding agreement between parties.
    • Essential elements of a valid contract: parties, wording, subject matter, consideration
    • Common Islamic contracts include sale (bai), leasing (ijarah), and partnership (musharakah)

    Sale and its types

    • Sale (Bai): exchange of value with mutual consent.
    • Valid sale (Bai Sahih) has four essentials: contract, subject matter, price, possession
    • Void sale (Bai Baatil): lacking essential elements or involving prohibited objects
    • Bai Fasid: valid contract with defects that can be rectified
    • Bai Makrooh: valid but undesirable contract

    Khiyars (Options in Sale)

    • Khiyar-e-Shart: an option to cancel a contract within a certain period.,
    • Khiyar-e-Roiyyat: option to inspect goods in a sale
    • Khiyar-e-Aib: option to void if goods have defects
    • Khiyar-e-Wasf: option to reverse if goods differ from agreed quality
    • Khiyar-e-Ghaban: option to reverse if price is higher than normal market rate

    Islamic Banking Framework and Profit Sharing

    • Islamic banks avoid interest, utilizing concepts like profit sharing
    • Different types of deposits (current, saving) operate with varying interest-free principles
    • Financing techniques include Mudarabah for profit-sharing and Murabaha for cost-plus sales.

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    Description

    This quiz delves into the key concepts of production and distribution theories, focusing on the factors of production and the differences between capitalistic and Islamic economic systems. It covers topics such as private property rights, compensation for labor, and the role of the state in trade and industry. Test your understanding of these foundational economic principles.

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