Economics Chapter 2: The Market System

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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'?

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

What is the main advantage of the market system?

Efficiency in resource allocation Signup and view all the answers

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

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

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

The injection of government spending and the leakage of taxes Signup and view all the answers

What is the purpose of the circular flow model?

To show how goods and money flow within an economy Signup and view all the answers

What is the main characteristic of the Islamic economic system?

Mostly private ownership, with government guidance Signup and view all the answers

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

A blessing for the whole world and humanity Signup and view all the answers

Economics Chapter 2: The Market System

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Questions and Answers

What is the main problem with the command system?

What is the main goal of the Islamic economy?

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

What is the concept of the 'invisible hand'?

What is the main advantage of the market system?

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

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

What is the purpose of the circular flow model?

What is the main characteristic of the Islamic economic system?

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

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