Economics Chapter 2: The Market System
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Questions and Answers

What is the main problem with the command system?

  • The focus on material pursuits only
  • The coordination problem and the incentive problem (correct)
  • The alignment of individual and social interest
  • The lack of private ownership and government control

    • What is the main goal of the Islamic economy?

  • Maximizing profits for private businesses
  • Promoting government control over key resources
  • Encouraging self-interest over collective interest
  • Achieving falah by balancing material, social, and spiritual pursuits (correct)

    • What is the relationship between households and businesses in the circular flow model?

  • Businesses supply goods and services, and households demand them (correct)
  • Households supply goods and services, and businesses demand them
  • Households and businesses are separate entities with no interaction
  • Government controls the flow of goods and services between households and businesses

    • What is the concept of the 'invisible hand'?

    <p>The concept of self-interest leading to socially beneficial outcomes</p> Signup and view all the answers

    What is the main advantage of the market system?

    <p>Efficiency in resource allocation</p> Signup and view all the answers

    What is the role of government in the Islamic economic system?

    <p>Government manages key resources and essential sectors, with private ownership</p> Signup and view all the answers

    What is the concept of 'injections' and 'leakages' in the circular flow model?

    <p>The injection of government spending and the leakage of taxes</p> Signup and view all the answers

    What is the purpose of the circular flow model?

    <p>To show how goods and money flow within an economy</p> Signup and view all the answers

    What is the main characteristic of the Islamic economic system?

    <p>Mostly private ownership, with government guidance</p> Signup and view all the answers

    What is the concept of 'Rahmatan li al-’alamin' in the Islamic economy?

    <p>A blessing for the whole world and humanity</p> Signup and view all the answers

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