Question

The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than what it gains from exports. Which of the following theories prohibits such international trade?

Answer 1

Answer:

C) Mercantilism

Explanation:

Mercantilism is an old economic theory that was popular when both the British and Spanish empires were at its peaks a couple of centuries ago. It basically stated that countries should trade to increase their wealth (accumulation of gold and other riches), and that way they would be able to afford a large and powerful army. With a large and powerful army they would be able to conquer new colonies or dominate other countries and keep increasing their wealth.

This theory became obsolete as the Spanish empire crumbled, and wars ravaged Europe. Finally the last great empire fell at the beginning of the 20th century (British empire), but the last decades it had been involved in too many expensive wars and disputes.

Mercantilism is now completely rejected, and has been like that for a long time, at least in western countries.

Answer 2

Answer:

Mercantilism

Explanation:

Mercantilism is a national economic policy that is designed to maximize the exports, and minimize the imports, of a nation.