Mercantalists

Question 1

Mercantilism factors of production

Answer 1

Land, Capital, Labor

Question 2

Doctrines of Mercantilists

Answer 2

• Promotion of National wealth and power
• Increase wealth, maintain positive trade balance.
• Government intervention is required to support Exports, restrict imports, and favor industry over primary production

Question 3

Mercantilists view of trade and production

Answer 3

Trade is a zero sum game meaning that exports should always be larger than imports. No analysis of production

Question 4

Mercantilism contribution

Answer 4

1) The idea that the laws of the economy could be discovered by the same scientific methods that revealed the laws of physics
2) Many mercantilists saw relationships of “cause and effect” in the economy
3) Understanding these rules of economics can help design legislation that can positively influence the economy

Question 5

Lasting contributions of mercantilism

Answer 5

influenced attitudes toward merchants, Promoted nationalism, increased the role of chartered trading companies (example east india trading company)

Question 6

Sir William Petty

Answer 6

• Tried to measure population, national income, exports, imports, and capital stock
• His statistical methods were crude, and conclusions were typical mercantilists.
• Until the end of the 19th century, the main tool of economics analysis is verbal arguments.

Question 7

David Hume

Answer 7

• Denied that money and gold were equivalent to wealth. instead they had merely instrumental value.
• He thought that accumulating precious metal would result in higher prices.
• Believed that imports as well as exports were beneficial. -Suggested that trade was not equivalent to warfare, since both of the parties benefit from the transaction.