Question

Unlike the mercantilists, Adam Smith maintained that:

A. Government control of trade leads to maximum economic welfare.
B. Trade benefits one nation only at the expense of another nation.
C. The world's output of goods must remain constant over time.
D. All nations can gain from free international trade.

Answer 1

Adam Smith maintained that all nations can benefit from free international trade, a view that opposed mercantilist ideas of protectionism and government regulation.

Step-by-step explanation:

Unlike the mercantilists, Adam Smith maintained that all nations can gain from free international trade. Smith criticized the mercantilist approach, which involved heavy government regulation and protectionism designed to maximize a country's wealth by restricting imports and promoting exports. Instead, Smith argued that trade should be free and without barriers, allowing countries to engage in commerce based on their comparative advantages. Through such trade liberalization, Smith believed that all participating nations could enjoy greater prosperity, and this could be achieved without the need for government intervention, which he saw as a hindrance to economic efficiency and growth.

The correct answer to the student's question is D. All nations can gain from free international trade.