Mohammed Zakaria CDCS

PA to Managing Director & CEO

Islami Bank Bangladesh Limited
Define the Economics
Economics is the social
science that studies the
production, distribution,
and consumption of goods
and services. Economics
focuses on the behavior
and interactions of
economic agents and how
economies work.Wikipedia
Discuss the main features of Capitalistic, Socialistic and Islamic Economics
What are the features of socialist economy?
Collective Ownership of Resources. Socialist ideals include production for
use, rather than for profit; an equitable
Central Economic Planning. distribution of wealth and material
resources among all people; no more
No Choice for Consumers.
competitive buying and selling in the
Equal Distribution of Income. market; and free access to goods and
services
Absence of Market Forces.
Describe the main features of Islamic economy

The central features of an Islamic economy are often summarized as:

the "behavioral norms and moral foundations" derived from the
Quran and Sunnah;
collection of zakat and other Islamic taxes,
prohibition of interest (riba) charged on loans.

What is the main focus of Islamic economics?

It tries to promote human brotherhood, socio-economic justice and the well-
being of all through an integrated role of moral values, market mechanism,
families, society, and 'good governance. ' This is because of the great emphasis in
Islam on human brotherhood and socio-economic justice.
Explain “Equitable justice is better than Equality”

Equality means each

individual or group of
people is given the same
resources or
opportunities. Equity
recognizes that each
person has different
circumstances and
allocates the exact
resources and
opportunities needed to
reach an equal outcome.
 Define Micro Economics and Macro Economics

• Economics is divided into

two categories:
1. Microeconomics
2. Macroeconomics.
• Microeconomics is the study
of individuals and business
decisions, while
• Macroeconomics looks at
the decisions of countries
and governments
What are the major indicators of macroeconomics of a country?

What are the major

Macroeconomic indicators?

They include things like: interest

rates announcements, GDP,
consumer price index,
employment indicators, retail
sales, monetary policy, and
more. Macroeconomic indicators
may cause increased volatility in
the financial markets.
Define Islamic Economics and Conventional Economics.
Explain Law of demand and law of supply with graph.

• The law of demand holds

that the demand level for a
product or a resource will
decline as its price rises, and
rise as the price drops.
Conversely, the law of supply
says higher prices boost
supply of an economic good
while lower ones tend to
diminish it.
What is shift in demand curve in economics? Explain with graphical
presentation.

Demand curve movement

refers to changes in price
that affect the quantity
demanded. A demand curve
shift refers to fundamental
changes in the balance of
supply and demand that
alter the quantity demanded
at the same price.
What is Elasticity of Demand? What is the implication of measuring
Price elasticity, Income elasticity and Cross elasticity of demand?

• An elastic demand is
one in which the
change in quantity
demanded due to a
change in price is large.
• An inelastic demand is
one in which the
change in quantity
demanded due to a
change in price is small
Elasticity of Demand
What is cross price elasticity of demand?

• What Is Cross Elasticity of

Demand? The cross
elasticity of demand is an
economic concept that
measures the
responsiveness in the
quantity demanded of
one good when the price
for another good
changes.
Types of Price Elasticity of demand
In what sense Cardinal utility and Ordinal utility are different from
Marginal utility?
Cardinal Utility is the utility where the
satisfaction derived by consuming a product
can be expressed numerically. Ordinal Utility
is the utility where the satisfaction derived by
consuming a product cannot be expressed
numerically
What is marginal Utility?
Marginal utility is the
added satisfaction that
a consumer gets from
having one more unit
of a good or service.
The concept of
marginal utility is used
by economists to
determine how much of
an item consumers are
willing to purchase.
 State the implication of “law of diminishing marginal utility”,

• The law of diminishing

marginal utility says that
the marginal utility
from each additional
unit declines as
consumption increases.
• The marginal utility can
decline into negative
utility, as it may become
entirely unfavorable to
consume another unit of
any product
What is market? What do you understand by “Invisible hand” in
market economy?
The invisible hand is a metaphor for how, in a
Market means by which the free market economy, self-interested individuals
exchange of goods and services operate through a system of mutual
takes place as a result of buyers
and sellers being in contact with interdependence. This interdependence
one another, either directly or incentivizes producers to make what is socially
through mediating agents or necessary, even though they may care only about
institutions. their own well-being

What is an example of the invisible hand

of the market?
The Invisible Hand of the market creates
predictable economic systems such as
supply and demand, because humans are
relatively predictable in their behavior. For
example, you predict that when you go to
the supermarket there will be eggs and
milk for sale.
Distinguish between economies and diseconomies scale.

• Economies of scale exist

when long run average
total cost decreases as
output increases,
diseconomies of scale
occur when long run
average total cost
increases as output
increases, and constant
returns to scale occur
when costs do not change
as output increases.
Define GDP, GNP, NNP and per capita income.

GDP stands for "Gross Domestic Product"

and represents the total monetary value
of all final goods and services produced
(and sold on the market) within a
country during a period of time (typically
1 year). Purpose. GDP is the most
commonly used measure of economic
activity.
Define GDP, GNP, NNP and per capita income.

GNP
• Gross national product is
one metric for measuring a
nation's economic output.
Gross national product is
the value of all products
and services produced by
the citizens of a country
both domestically, and
internationally minus
income earned by foreign
residents.
What is NNP & Per Capita Income?
Net national product (NNP) is gross
national product (GNP), the total value
of finished goods and services
produced by a country's citizens
overseas and domestically, minus
depreciation.
Fixed Cost?
• The average fixed cost
(AFC) is the fixed cost
that does not change
with the change in the
number of goods and
services produced by
a company. What is the difference
• the average fixed cost between total cost and
(AFC) is the fixed cost average cost?
per unit and is Total costs are all costs
calculated by dividing incurred for producing a
the total fixed cost by given good, whereas
the output level. average costs are the
average costs per unit of
good manufactured.
Variable Cost?
Variable costs are any
expenses that change
based on how much a
company produces and
sells. This means that
variable costs increase as
production rises and
decrease as production falls.
Some of the most common
types of variable costs
include labor, utility
expenses, commissions, and
raw materials.
Average Cost?
Average cost is the cost per
unit manufactured in a
production run. It represents
the average amount of money
spent to produce a product.
This amount can vary,
depending on the number of
units produced.

In economics, average cost or unit cost

is equal to total cost (TC) divided by the
number of units of a good produced (the
output Q): Average cost has strong
implication to how firms will choose to price
their commodities.
Marginal cost?
• Marginal cost is the cost to produce one
additional unit of production. It is an
important concept in cost accounting as
marginal cost helps determine the most
efficient level of production for a
manufacturing process.
Distinguish between narrow money and broad money.
What Is Narrow Money? Narrow money is a Broad money includes currency, deposits with an
category of money supply that includes all agreed maturity of up to two years, deposits
physical money such as coins and currency, redeemable at notice of up to three months and
demand deposits, and other liquid assets held repurchase agreements, money market fund
by the central bank. shares/units and debt securities up to two years.
Distinguish between monetary policy and fiscal policy
Monetary policy is a set of actions to control a
nation's overall money supply and achieve
Fiscal policy is the use of government spending and
economic growth. Monetary policy strategies
taxation to influence the economy. Governments
include revising interest rates and changing bank
typically use fiscal policy to promote strong and
reserve requirements. Monetary policy is
sustainable growth and reduce poverty.
commonly classified as either expansionary or
contractionary.
Quantity Theory of Money
The quantity theory of money is a framework to
understand price changes in relation to the
supply of money in an economy. It argues that an
increase in money supply creates inflation and
vice versa. The Irving Fisher model is most
commonly used to apply the theory.
Quantity Theory of Money Limitations
Money velocity is not stable
• One of the main weaknesses and, in the short-run, prices are
of Fisher's quantity theory of sticky, so the direct relationship
money is that it neglects the
role of the rate of interest as between money supply and
one of the causative factors price level does not hold.
between money and prices.
Fisher's equation of exchange
is related to an equilibrium
situation in which rate of
interest is independent of the
quantity of money.
What is money market?
What is inflation and Inflation Targeting?
Inflation is the rate of increase in prices over a
given period of time. Inflation is typically a
broad measure, such as the overall increase in
prices or the increase in the cost of living in a
country.

Inflation targeting is a central bank

strategy of specifying an inflation rate
as a goal and adjusting monetary
policy to achieve that rate. Inflation
targeting primarily focuses on
maintaining price stability, but its
proponents also believe that it supports
economic growth and stability
There are two main causes of inflation: demand-pull and
cost-push. Both are responsible for a general rise in prices
in an economy, but each works differently to put pressure
on prices. Demand-pull conditions occur when demand
from consumers pulls prices up, while cost-push occurs
when supply costs force prices higher
What is Capital
Market?
Capital market is a place
where buyers and sellers
indulge in trade
(buying/selling) of financial
securities like bonds, stocks,
etc. The trading is
undertaken by participants
such as individuals and
institutions. Capital market
trades mostly in long-term
securities.
What Instruments Are Used in the
Capital Market?

Mutual funds, treasury

bonds, private sector bonds,
stocks, private sector bills,
asset-guaranteed securities,
asset-backed securities,
options, lease certificates,
and the futures contract
instruments are used in the
capital markets.
What is real Income

Real income is how much

money an individual or
entity makes after
accounting for inflation and
is sometimes called real wage
when referring to an
individual's income. Individuals
often closely track their
nominal vs. real income to
have the best understanding of
their purchasing power.
How does inflation
affect income?
Rising inflation means you
have to pay more for the
same goods and services.
This can help you in the
form of income inflation or
asset inflation, such as in
housing or stocks, if you
own the assets before
prices rise, but if your
income doesn't keep pace
with inflation, your buying
power declines.
How does inflation
affect real income?
Currency board
and dollarization?
Economic Development:

Economic development is defined as

an increase in a country's wealth and
standard of living. For
example, Improved productivity,
higher literacy rates, and better
public education are all
consequences of economic
development in a country.
A foreign direct investment refers to a purchase of a particular organisation's
interest by another foreign organisation. Such an organisation or investor is
located in a different country than the organisation whose interest is
purchased.
Inclusive growth
• Inclusive growth
is economic growth
that is distributed
fairly across society
and creates
opportunities for
all. The power of 4
billion. Centre for
Well-being,
Inclusion,
Sustainability and
Equal Opportunity
Components of
inclusive growth
Open Market
Operation
Open Market
Operation
Surplus Budget and
Deficit Budget