, ECS3705 Assignment 1 (COMPLETE ANSWERS)
Semester 2 2025 – DUE 25 September 2025; 100%
correct solutions and explanations.
QUESTION 1:
Mercantilist Views on Wealth Creation
The Mercantilist school of thought, dominant in Europe between the
16th and 18th centuries, argued that wealth was created primarily
through the accumulation of precious metals such as gold and silver.
Wealth was seen as finite, and the prosperity of a nation depended
on its ability to secure a greater share of these limited resources than
its rivals. This belief led to a strong emphasis on maintaining a
positive balance of trade, where exports exceeded imports, thereby
ensuring an inflow of bullion. In this way, mercantilists viewed
international trade as a zero-sum game, where one nation’s gain was
another’s loss.
Mercantilist Views on Wealth Stimulation
To stimulate wealth, mercantilists encouraged policies that
promoted manufacturing and limited imports through tariffs and
quotas. They believed that a large population was essential to
provide labor for production and to serve as consumers of goods,
thereby boosting domestic industries. Colonies were also considered
critical sources of raw materials and captive markets for finished
goods, helping the mother country to enhance its economic power.
Thus, the stimulation of wealth was linked to active government
policies that protected local industries, restricted foreign
competition, and fostered economic self-sufficiency.
The Role of Government in the Economy
In the mercantilist view, government intervention was essential for
Semester 2 2025 – DUE 25 September 2025; 100%
correct solutions and explanations.
QUESTION 1:
Mercantilist Views on Wealth Creation
The Mercantilist school of thought, dominant in Europe between the
16th and 18th centuries, argued that wealth was created primarily
through the accumulation of precious metals such as gold and silver.
Wealth was seen as finite, and the prosperity of a nation depended
on its ability to secure a greater share of these limited resources than
its rivals. This belief led to a strong emphasis on maintaining a
positive balance of trade, where exports exceeded imports, thereby
ensuring an inflow of bullion. In this way, mercantilists viewed
international trade as a zero-sum game, where one nation’s gain was
another’s loss.
Mercantilist Views on Wealth Stimulation
To stimulate wealth, mercantilists encouraged policies that
promoted manufacturing and limited imports through tariffs and
quotas. They believed that a large population was essential to
provide labor for production and to serve as consumers of goods,
thereby boosting domestic industries. Colonies were also considered
critical sources of raw materials and captive markets for finished
goods, helping the mother country to enhance its economic power.
Thus, the stimulation of wealth was linked to active government
policies that protected local industries, restricted foreign
competition, and fostered economic self-sufficiency.
The Role of Government in the Economy
In the mercantilist view, government intervention was essential for
