Asked by Martevus Blount on May 17, 2024
Verified
The mercantilism policy failed to generate gains from trade for countries which adopted it because of:
A) increases in consumer spending.
B) high levels of federal debt.
C) supply-side shocks from the oil-exporting countries.
D) runaway inflation in the U.S.
E) retaliations from other countries.
Mercantilism
The incorrect theory that a nation’s economic objective should be to accumulate precious metals in the public treasury; this theory prompted trade barriers to cut imports, but other countries retaliated, reducing trade and the gains from specialization.
Trade Gains
The benefits that countries obtain from engaging in international trade, often reflected in improvements in economic welfare, efficiency, and resource allocation.
Supply-side Shocks
Unexpected events that affect the supply side of the economy, potentially altering the cost of production and leading to changes in prices and output.
- Understand historical economic theories and policies and their effects on modern economics.
Verified Answer
YT
Yeyenne TelismeMay 21, 2024
Final Answer :
E
Explanation :
Mercantilism, which emphasized exports over imports and the accumulation of gold and silver, often led to trade retaliation from other countries, ultimately hindering gains from trade. Other options such as increases in consumer spending or supply-side shocks would not necessarily directly impact the success of the mercantilism policy. Federal debt and inflation may have had indirect effects, but they were not the primary reasons for the failure of the mercantilism policy.
Learning Objectives
- Understand historical economic theories and policies and their effects on modern economics.