Trade and Finance in Islam

17 Grade 7 Religious Education (IRE) questions on Trade and Finance in Islam, with worked marking schemes. 17 questions are available on this topic in full.

1. Question 1

   4 marks

   State FOUR business practices that are prohibited (haram) in Islamic trade and finance.

   (4 marks)

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2. Question 2

   1 mark

   Which of the following is a lawful (halal) form of earning in Islam?

   A. Selling goods with honest measure and fair profit

   B. Charging interest on a loan

   C. Gambling in a casino

   D. Selling stolen property

   (1 mark)

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3. Question 3

   4 marks

   Mr. Ali owns a shop in the market. He always uses honest weights, tells customers the truth about his goods, and refuses to charge interest (riba) when people buy on credit.

   (a) State the Islamic ruling on charging riba (interest). (1 mark)

   (b) Identify three honest trading practices shown by Mr. Ali that Islam encourages. (3 marks)

   (4 marks)

   Marking scheme

   (a) Riba is haram (forbidden) in Islam – Allah has permitted trade and forbidden riba (Surah Al-Baqarah 2:275). (1 mark) (b) Any three honest practices (1 mark each): - Using correct and accurate weights and measures (cheating in measure is condemned in Surah Al-Mutaffifin 83:1-3). - Being truthful and not hiding defects in goods (the truthful, trustworthy trader will be with the prophets, the truthful and the martyrs – Hadith, Tirmidhi). - Avoiding riba (interest) in dealings. - Keeping promises and honouring agreements; not deceiving or swearing falsely to sell goods. (Total 3 marks)

4. Question 4

   5 marks

   Riba is strictly prohibited in Islam.

   (a) Define riba.

   (b) Give TWO reasons why Islam prohibits riba.

   (5 marks)

   Marking scheme

   (a) Riba is the unlawful increase/interest charged on a loan or in certain exchanges over and above the principal – 1 mark. (b) Up to 2 marks each (max 4): it exploits the poor/needy borrower; it creates injustice by earning wealth without effort/risk; it destroys the blessing (barakah) in wealth; it widens the gap between rich and poor; Allah and His Messenger declared war on those who deal in it. (5 marks)

5. Question 5

   1 mark

   When a debtor is genuinely unable to pay, the Qur'an encourages the creditor to:

   A. Grant him more time to repay

   B. Report him for imprisonment immediately

   C. Take his property by force

   D. Charge extra interest

   (1 mark)

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6. Question 6

   1 mark

   Gambling and games of chance, forbidden in Islamic finance, are referred to as:

   A. Maysir

   B. Nisab

   C. Amanah

   D. Mudarabah

   (1 mark)

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7. Question 7

   1 mark

   A businessman offers to lend Mwalimu Juma money on condition that he pays back more than he borrowed as a fixed extra charge. Juma refuses because Islam forbids this kind of unjust increase on loans. What is this forbidden practice called?

   A. Mahr

   B. Hajj

   C. Riba (usury/interest)

   D. Iman

   (1 mark)

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8. Question 8

   1 mark

   A lender offers Bakari money on condition that he repays more than he borrowed simply because of the delay in time. What does Islam call this added charge, and what is its ruling?

   A. Sadaqah, which is recommended

   B. Riba (interest), which is prohibited

   C. Zakat, which is obligatory

   D. Mahr, which is required

   (1 mark)

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9. Question 9

   1 mark

   A partnership in which one party provides capital and the other provides labour or skills, sharing profit by agreement, is an Islamic finance contract called:

   A. Maysir

   B. Riba

   C. Mudarabah

   D. Gharar

   (1 mark)

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10. Question 10

    6 marks

    Explain THREE ethics (good conduct) that a Muslim trader should observe in the marketplace.

    (6 marks)

    Marking scheme

    Up to 2 marks per explained ethic (max 6): honesty – disclosing the true condition of goods; fairness – using correct weights and measures; keeping promises and contracts; avoiding riba and unlawful gains; being kind and lenient in buying, selling and collecting debts; not exploiting customers with excessive prices; giving Zakat on trade profits. (6 marks)

11. Question 11

    1 mark

    Keeping money or goods safely on behalf of another person and returning them intact reflects the trade-related virtue of:

    A. Gharar (uncertainty)

    B. Riba (interest)

    C. Amanah (trustworthiness)

    D. Maysir (gambling)

    (1 mark)

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12. Question 12

    1 mark

    A shopkeeper in Nakuru hides the poor quality of maize to sell it at a higher price. In Islamic trade, this act of deception is:

    A. Recommended

    B. Obligatory

    C. Prohibited (haram)

    D. Permissible if profitable

    (1 mark)

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13. Question 13

    1 mark

    Selling goods whose quantity, quality or delivery is unknown, involving excessive uncertainty, is prohibited in Islam and is called:

    A. Shukr

    B. Ihsan

    C. Gharar

    D. Sabr

    (1 mark)

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14. Question 14

    1 mark

    Islam permits trade but prohibits certain unlawful gains. The taking of interest on loans is forbidden and is known as:

    A. Amanah

    B. Riba

    C. Zakat

    D. Sadaqah

    (1 mark)

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15. Question 15

    6 marks

    Amina wants to start a halal business in her town. Explain THREE ways in which Islamic values guide her to run a business that benefits the whole community.

    (6 marks)

    Marking scheme

    Up to 2 marks per explained point (max 6): trading only in lawful (halal) goods so the community is not harmed; being honest and fair in pricing and measures so customers are not cheated; avoiding riba and exploitation so the poor are protected; paying Zakat and giving charity from profits to help the needy; providing employment and fair wages; keeping trust and honouring contracts, building a reliable economy. (6 marks)

16. Question 16

    1 mark

    A shopkeeper hides the defects of an item and swears falsely that it is in perfect condition to make a quick sale. Which trading principle taught by the Prophet (S.A.W.) is he violating?

    A. Honesty and disclosure in business dealings

    B. The obligation of fasting

    C. The direction of the qibla

    D. The recitation of Surah Al-Fatiha

    (1 mark)

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17. Question 17

    1 mark

    The Prophet (S.A.W.) taught that giving a false oath to convince a buyer that goods are genuine does what to the blessing (barakah) of a sale?

    A. It has no effect

    B. It doubles the profit

    C. It increases the blessing

    D. It wipes away the blessing

    (1 mark)

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