Islamic Economics - Midterm 2 Practice Exam

Question 1Lecture 6

What is the correct definition of "Relative Scarcity" in Islamic economics?

The earth does not have enough resources to sustain the human population The impossibility of providing every human with all their needs in the appropriate time, place, and form The unequal distribution of wealth between rich and poor nations The inability of governments to manage economic resources efficiently

Question 2Lecture 6

According to the lecture, what are the TWO roles of relative scarcity in Islam?

A warning sign and a reason for charity A motive to work and a divine test requiring patience An economic problem and a social issue A punishment from Allah and a call for Zakah

Question 3Lecture 6

Which of the following is NOT listed as a reason for starvation according to the Islamic perspective?

Unequal distribution of wealth and population Absolute shortage of the earth's resources Spiritual crisis making people indifferent to the poor People's failure to use what Allah has given them

Question 4Lecture 7

In Islam, what is the definition of "Capital" as a production element?

The total income earned by a person from their labour The portion of wealth used to produce goods and services Money saved in a bank for future use Any natural resource found in the earth

Question 5Lecture 7

What is the key difference between "Musaqah" and "Muzara'ah"?

Musaqah involves cultivating bare land; Muzara'ah involves existing crops Musaqah involves irrigating existing crops; Muzara'ah involves cultivating bare land Both involve cultivating bare land, but the profit-sharing differs Musaqah is for animals; Muzara'ah is for crops

Question 6Lecture 7

The Prophet ﷺ said "Indeed, Allah loves that when one of you does a job, he does it with excellence." This refers to which work ethic?

Willingness and sincerity Mastering the work (Itqan / إتقان) Honesty in doing the work Choosing suitable work

Question 7Lecture 7

What distinguishes "Saving" from "Hoarding" in Islamic economics?

Saving is for the rich; hoarding is for the poor Saving involves paying Zakah; hoarding withholds money from circulation without Zakah There is no difference; both are prohibited in Islam Saving is short-term; hoarding is long-term

Question 8Lecture 8

In Islamic consumption theory, what does "Taraf" (ترف) refer to?

Spending money on wrongful and unworthy things A luxury lifestyle characterized by indulgent extravagance Exceeding the limit of temperance in spending Moderate and balanced expenditure

Question 9Lecture 8

The Quran says "spendthrifts are brothers of the devils." Which Arabic term does this describe?

Taraf (ترف) Israf (إسراف) Tabthear (تبذير) Riba (ربا)

Question 10Lecture 8

In the Islamic concept of gratification (إشباع), which of the following is TRUE compared to the non-Islamic concept?

Islam allows the consumer absolute authority to consume whatever they wish Islam views gratification as both material and spiritual, requiring halal commodities More consumption always leads to greater happiness in Islamic thought Islam views interest as purely material enjoyment

Question 11Lecture 9

What is the definition of "Market" in Islamic economic thought?

A government-controlled space where goods are distributed equally An arrangement where sellers and buyers meet, exchange, and pricing is determined A place where only halal goods are traded under strict supervision A virtual concept with no physical boundaries

Question 12Lecture 9

When selling gold for silver (different types of usurious goods), Islamic law requires:

Equal amounts AND immediate exchange Immediate exchange only; different amounts are permitted No special conditions - it is treated as a normal transaction Equal amounts only; timing is flexible

Question 13Lecture 9

What is "Najash" (false bidding) and who bears responsibility for it?

A real buyer overbidding; only the buyer is responsible A fake bidder raising prices without intent to buy; both seller and fake bidder sin Price manipulation by the government; the state is responsible Monopoly practices; only the monopolist is at fault

Question 14Lecture 9

The Prophet ﷺ said: "If anyone withholds grain for forty days seeking a high price, he has renounced God." This refers to which prohibition?

False bidding (Najash) Monopoly (Ihtikaar) Usury (Riba) Cheating in weights

Question 15Lecture 10

When the Prophet ﷺ was asked to set prices during a price rise, he refused. What was his reason?

Governments have no right to interfere in any market matter Allah is the one who sets prices, and he hoped to meet Allah without claims of injustice The price rise was caused by human greed and should be investigated first Trade agreements prevented him from interfering

Question 16Lecture 10

According to Islamic economics, in which situation does the ruler have the RIGHT to intervene and set prices?

Whenever consumer demand drops significantly When prices rise due to natural supply and demand When prices rise due to monopoly, greed, or injustice by traders The ruler can never interfere with prices in any situation

Question 17Lecture 7

Which of the following best describes "Mudarabah" (Brokerage)?

Two partners both contributing money in equal shares One partner provides capital; the other provides effort; profits shared by agreement A single person trading with their own money alone The government providing funds to citizens for investment

Question 18Lecture 6

Malthus claimed population growth outstrips resources. Which of these is a valid Islamic rebuttal?

Population must be limited by the government to match resources Alternatives to exhausted resources emerge, and some resources (like fish) renew themselves Malthus was correct and this is why poverty exists Technology alone solves all resource shortages

Question 19Lecture 8

What does the Quran mean by "do not let your hand be tied to your neck, nor stretch it out fully"?

Avoid physical injury at work Be neither a miser nor a spendthrift - follow the middle path of moderation Give all of your wealth in charity Do not engage in manual labour

Question 20Lecture 9

What was the sin that caused Allah to destroy the people of Prophet Shu'ayb (peace be upon him)?

Practicing usury (Riba) Monopoly on grain Cheating in weights and measures False bidding in the marketplace

Question 21Lecture 6

Relative Scarcity means the earth does not possess sufficient resources to provide a good life for humanity globally.

True False

Question 22Lecture 7

In the Islamic concept, production becomes an act of worship (ibadah) when paired with sincere intention (niyyah).

True False

Question 23Lecture 9

When selling gold for gold (same type of usurious goods), Islamic law only requires immediate exchange - the amounts do not need to be equal.

True False

Question 24Lecture 10

According to Islamic economics, the government is always allowed to set prices regardless of the reason for the price increase.

True False

Question 25Lecture 8

In Islamic economics, "Israf" (إسراف) is considered more extreme than "Taraf" (ترف).

True False

Question 26Lecture 7

List and briefly explain the THREE motives for production in Islam.

Question 27Lecture 8

Differentiate between "Taraf," "Israf," and "Tabthear" with an example of each.

Question 28Lecture 9

What are the conditions required in both Musaqah and Muzara'ah contracts?

Question 29Lecture 9

Name FOUR prohibited acts in the Islamic market and briefly explain each.

Question 30Lecture 10

Explain the TWO reasons for high prices in Islam and state when the government may or may not intervene in each case.