Please enable JavaScript.
Coggle requires JavaScript to display documents.
DETERMINATION OF NATIONAL INCOME EQUILIBRIUM (AUTONOMOUS AND INDUCED…
DETERMINATION OF NATIONAL INCOME EQUILIBRIUM
APPROACHES IN DETERMINING NATIONAL INCOME EQUILIBRIUM
AGGREGATE DEMAND=AGGREGATE SUPPLY
LEAKAGES= INJECTIONS
AUTONOMOUS AND INDUCED CONSUMPTION
CONSUMPTION THEORY
The spending by all the households in the economy on goods and services produced within the economy
Yd= Income+ Transfer payment- Taxes
Concepts of consumption
MPC= Changes in C/ Changes in Yd
APC= C/ Yd
Consumption function
C= a+ bYd
Factors influencing consumption
Expectation
Price level
Wealth
Interest rate
Stock of durable goods
SAVING THEORY
The part of income received by households that is not used for consumption or expenditure
S= -a + (1-b)Yd
Concepts of saving
MPS= Changes in S/ Changes in Yd
APS= S/Yd
Break-even Income
The point which consumption is equal to national income and saving is equal to zero
ISLAMIC CONSUMPTION THEORY
ISLAMIC CONSUMPTION
Consumption expenditure for self and family
Consumption expenditures for others
FACTORS INFLUENCING MUSLIM'S CONSUMER BEHAVIOUR
The Al-falah principle
The principle of wealth
The belief in the hereafter life
The principle of consumption of goods and services
The ethics of consumption
AUTONOMOUS AND INDUCED INVESTMENT
INDUCES INVESTMENT
An investment which depends on national income as it will increase if the national income increases
AUTONOMOUS INVESTMENT
An investment which is fixed and does not depends on national income
FACTORS INFLUENCING INVESTMENT
Expectations of the future
Price and productivity of capital goods
Innovations
Profits
Rate of interest
Government policies
Rate of return
ISLAMIC INVESTMENT THEORY
BOUNDARIES
Investment should highlight on well-being besides profitability
Its implementation should not against Shari'ah
Investment is based on desires of human
Does not involve any forms of riba
Only permissible activities are allowed