Question

Who are the mercantilists? What policies did they advocate and how did they expect these policies to be achieved? Explain the problems associated with their policies. What is the relationship between these policies and absolute advantage? Do you believe that these policies are currently being practiced and which country and how?

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Answer 1

Mercantilism originated during seventeenth and eighteenth centuries in Europe. A group of people including merchants, bankers ,government officials wrote essays and pamphlets on international trade and advocated an economic philosophy called mercantilism. b. They advocated the way for a nation to become rich and powerful was to export more than it imported . The resulting export surplus may use to increase wealth including gold and silver. More the gold and silver the nation had , greater the power of nation was. Thus government has to use all its power to stimulate the nation's exports and discourage and restrict imports. one nation could gain only at the expense of nation. Mercantilism measures the wealth of nation by the stock of precious it accumulated. c. Mercantilism brought conflict between European countries . Each country wanted to be more powerful than other nation. One country could gain at the expense of other nation. Mercantilism gave birth to colonialism . They created enmity and conflict among other nations. Mercantilism was a one way traffic.. It put emphasis on export but not import . It is not easy be self sufficient . A nation' s exports become a nation's imports. d. Mercantilism promote only exports and discourage imports and they advocated by promoting exports and discouraging imports, nation will become more powerful and rich . But absolute advantage theory advocated that nation will produce and export a commodity which has absolute advantage and import a commodity which has absolute disadvantage. e I think these policies are not currently being practiced . Because it is difficult to being self -sufficient in today's world. Because globalization promotes free trade across globe. Each nation promotes free trade with some protectionist policies