Pre Ricardian Views

Pre-Ricardian views on mass:

1(a) How does the mercantilist concept of acresal wealth disaccord from todays view?

Mercantilism : accumulation of prosperous. maximise exportings, minimize imports to locomote care surplus which increase nations wealth, prestige and power.

Todays views : Countries involve in free trade. Some countries may see restrictions on trade to protect domestic outputs and employment.
Mercantilism, though declining, is still alive.

(b) Why did mercantile system advocate the accumulation of gold?

During the 16th century, accumulation of gold and silver defined a landed estates wealth. Countries who export go out receive gold while countries who import goods issue in outflow of gold. Therefore, the more a country exports, the wealthier is the country. In order to maintain a trade surplus, subsidies were provided to maximize exports and tariffs and quotas were raiment up to minimize imports.

(c) How do the mercantilists views on trade discord from those of rapture Smith?

Mercantilists viewed trade as a zero-sum enlivened where one country gains in the expense of another country. Adam Smith argued that trade is a positive-sum game in which both countries can benefit from free trade and that government should not interfere with free trade because voluntary trade leads to change magnitude output and welfare.





2(a) How did Adam Smith explain his contention that both nations engaged in trade can benefit from trade?

Countries differ in their ability to produce goods efficiently. A country has an absolute profit in the production of a product when it is more efficient than any other country in producing it. Countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries. In this way, resources will be efficiently utilized and the total output and inspiration/welfare will increase.

(b) Why do nations usually impose restrictions on the free flow of trade?

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