(A) Why Did the Mercantilists Think That a Situation

question 24

Essay

(a) Why did the Mercantilists think that a situation where a country’s exports exceed its
imports is a “favorable” situation for the country? Briefly, what policies would a Mercantilist recommend in order to generate such a “favorable” situation?

(b) What was the “price-specie-flow doctrine” and how did it undermine Mercantilist thinking? Why would a situation where the demands for traded goods are “inelastic” with respect to price changes pose a problem for the “price-specie-flow doctrine” in its attack on Mercantilist thinking?

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