Question

The government of the Republic of Senna enforces tariffs and quotas to limit imported goods, while exports are subsidized. By using these instruments, the government seeks to achieve a surplus in the balance of trade. Based on this information, which approach most influences the Republic of Senna’s approach to international trade?

Multiple Choice

product life-cycle theory

new trade theory

Heckscher-Ohlin theory

theory of absolute advantage

mercantilism

Answer 1

The correct answer is letter "E": mercantilism.

Step-by-step explanation:

In the 16th to 18th centuries, mercantilism was the dominant economic theory. Governments were controlling their economies to limit imports and increase exports. It was believed that by doing this, the wealth of the nation would increase due to the surplus in the balance of trade.