Inflation in Islamic Perspective

Despite endangering economic activity, moderate inflation has had a negative impact on the welfare of those living on fixed incomes. Low inflation is between 10% and 30% annually.

• True

• False

Heavy Inflation : As a result of this inflation, the economy has become unstable. Due to the low return rates on savings, people are less likely to save money and are more likely to invest in tangible goods. The annual range of high inflation is between 30% and 100%.

• False

• True

Demand-pull inflation: The rise in raw material prices led to an increase in production costs (such as an increase in labor wages or an increase in fuel oil). Price increases and inflation result from these rising production costs.

• True

• False

Cost-pull inflation: According to the classicists, there is a connection between the amount of money in circulation and the level of prices. The price will double if the supply of commodities remains constant while the amount of money in circulation doubles.

• True

• False

Keynes's theory: Keynes recognized that the amount of money in circulation determines the price level. If there is an increase in the amount of money in circulation while the quantity of products available is fixed, the price will rise.

• True

• False

Al-Maqrizi asserts that inflation is divided into (two), namely

Natural factors (Natural inflation) and

Human Error Inflation.

• True

• False

Al-Maqrizi highlighted that human error as well as natural causes contribute to inflation.

• True

• False

Natural Inflation : A rise in aggregate demand (AD) is the outcome of too much money flowing in from abroad, where exports (X) outpace imports (M), resulting in very big net imports.

• True

• False

Natural Inflation : AlMaqrizi asserts that such operations increased in frequency during a period when the government's desire to generate money at a profit without incurring unaffordable high manufacturing expenses was in full swing.

• True

• False

Inflation occurs because prices in general increase and continue to persist

• True

• False