Final answer:
Mercantilism is an economic system designed to increase a nation's wealth through accumulating precious metals by maintaining a favorable balance of trade, imposing trade restrictions, and exploiting colonial possessions. This system was predominant in the 16th and 17th centuries and contributed to the expansion of European colonial empires.
Step-by-step explanation:
The Economic System Known as Mercantilism
An economic system centered around acquiring colonies and maintaining a greater volume of exports than imports is known as B. Mercantilism. This system emerged during the 16th and 17th centuries when European countries, such as England and France, adopted the mercantilist approach to increase national wealth. Mercantilism was based on the belief that the world's wealth, measured in gold and silver, was limited, making international trade a zero-sum game where one nation's gain was another's loss.
Mercantilist nations focused on building their economies by accumulating gold and silver, either through mining or through maintaining a favorable balance of trade. Governments would encourage domestic manufacturing and implement a variety of trade restrictions, including tariffs, monopolies, and exclusivity agreements, to ensure that colonies only traded with the mother country.
The essence of mercantilism was to maximize exports and minimize imports to ensure a trade surplus that would bring in precious metals. Colonies played a critical role as they supplied the mother countries with raw materials and served as markets for their finished goods. This helped to strengthen domestic industries and increased the national treasury. These practices eventually led to the establishment of extensive trade networks and the growth of merchant marines for the transportation of goods, thereby enhancing national military power through an increase in shipping capabilities and available manpower.
Over time, mercantilism gave way to other economic theories, notably capitalism, as nations and individuals began to favor economic systems based on free trade and market regulations driven by supply and demand dynamics. Nonetheless, the influence of mercantilism on the global economy, particularly on colonial patterns and trade practices, had long-lasting effects that extended well into the era of the Industrial Revolution.