Question

Describe mercantilism, and explain why some call it a poor approach to promoting economic development and prosperity. Given the criticisms, why do some countries continue to rely on practices based on mercantilism?

Answer 1

Mercantilism is an economic policy that aimed to accumulate silver and gold by controlling colonial and foreign markets through taxes and restrictions. It is criticized for limiting economic development. However, some countries still use it to protect domestic industries and maintain a positive trade balance.

Step-by-step explanation:

Mercantilism is an economic policy that aimed to accumulate silver and gold by controlling colonial and foreign markets through taxes, high tariffs, and other restrictions. Some people criticize mercantilism because it often led to monopolies, bans on certain goods, and restricted trade, which limited economic development and prosperity.

Despite the criticisms, some countries continue to rely on practices based on mercantilism because they believe it can protect domestic industries, maintain a positive trade balance, and promote economic self-sufficiency. Additionally, governments may see mercantilistic policies as a way to ensure national security and exert control over their economies.