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The French in Vietnam In the 17th century, what had the French sent to Vietnam in hopes of converting the population? Were they successful? military, and had a marginal success When did the French formally created a protectorate state in Vietnam? 1859 Alt...

A poverty cycle (poverty trap) Arises when low incomes result in low savings, permitting only low investments in physical, human and natural capital, and therefore low productivity of labor and of land. This gives rise to low, if any, growth in income (sometim...

An improvement in economic welfare. It is wider than economic growth and involves, for instance: a reduction in poverty increased life expectancies a greater range of economic and social choice health and education environmental protection and per capita inco...

Import substitution To reduce domestic consumers’ dependence on imported goods, for which they substitute domestic goods and services, thus promoting the development of domestic industries. AD Greater diversity of economic activities. Supply-side improvement...

Multinational competition Companies that have established a presence has productive units in more than one country. Multinational corporation One that has business operations in two or more countries. Foreign direct investment (FDI) Long-term investment where ...

Non-government organization The private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social service, or undertake community development. Types of foreign aid Humanitarian a...

Market based supply-side policies They can be used as a development strategy when the government allows the market to facilitate economic development in an ELDC. Encouraging export promotion strategy through liberalized free trade Decreasing direct taxation ...

Balance of payment Definition: Record of all economic transactions between the residents of a country and the rest of the world in a particular period. Balance = Credit – Debit Money coming into the country is recorded as credit items Money leaving the country...

Economic integration It describes a process whereby countries coordinate and link their economic policies. As the degree of economic integration increases, the trade** barriers** between countries decrease and their fiscal and monetary policies are more closel...

Exchange rate The price of one currency in term of another currency. Exchange rate index: the price of one currency in term of a basket of the other currencies, weighted according to the importance in the country’s international transaction. Floating exchange ...

International trade It means the exchange of goods and services between countries. Cost and Benefit Analysis benefit: Lower prices——(factor endowment & comparative advantage) Greater choice Differences in resources —— chance to access to import the commoditie...

Tariffs A tax impose on imported goods. (regressive tax). It is regressive because the tariff on a good would be higher proportion of low income earners than it would be on high income earner. Area C: Loss created by inefficient production of domestic produce...

Aggregate demand (AD) The total planned expenditures (spending) by households, firms, government and foreign sector in a period of time at given price levels. Why AD curve is downward sloping The wealth effects: Price level ↑ → real income ↓ → C & I ↓ → Rea...

Governments earns revenue primarily from: Taxes (direct and indirect) Sale of goods and services Sale of state-owned (government-owned) enterprises Government spending can be classified into Current expenditures Capital expenditures Transfer payments A bud...

Economic growth An increase in the total output of goods and services (real GDP) in an economy over time. Actual growth An increase in actual output (real GDP) through time. Potential growth An increase in potential output (or production possibilities). It ref...

Inequality & equity Equality in distribution of income = a narrow wealth gap Equity in distribution of income = fairness Equity ≠ equality Lorenz curve A graphical measure of a country’s income distribution within its population. It shows what percentage of th...

Inflation A persistent increase in the average price level in the economy, usually measured through the calculation of a consumer price index (CPI) Disinflation A falling rate of inflation. Deflation A persistent fall in the average price level in the economy....

Supply-side policies Supply-side policies aim at increasing potential output (the overall productive capacity) of an economy by increasing the quantity and/or quality of the factors of production, thus shifting the long-run aggregate supply (LRAS) curve to the...

The circular flow of income model A simple model of the economy showing flows of goods and services and factors of production between firms and households. Two sectors model It is assumed that the only decision-makers are households (or consumers) and firms (o...

Aggregate demand for labor (ADL) The total demand for all the labor that produce an economy’s goods & services. Aggregate supply for labor (ASL) The total number of an economy’s workers that are willing and able to work in the economy at every given average wa...