What economic theory suggests that a nation will become richer by exporting more than it imports?

What economic theory suggests that a nation will become richer by exporting more than it imports?

• A. Absolute Advantage
• B. Mercantilism
• C. Comparative Advantage
• D. Factor Endowment Theory

Answer: (B)

Mercantilism is the economic theory that asserts a nation's wealth and power are best served by increasing exports and accumulating precious metals like gold and silver. This notion dates back to the 16th to the 18th centuries and emphasizes that a favorable balance of trade—where exports exceed imports—leads to national prosperity. Under mercantilism, the government plays a significant role in regulating the economy and protecting domestic industries to enhance exports. The focus on achieving a trade surplus underpins the idea that exporting more than importing leads to accumulating capital and strengthening a nation's economic position. In contrast, while concepts like absolute advantage and comparative advantage discuss trade benefits and efficiency, they do not focus specifically on the export-import balance as a measure of wealth. Factor Endowment Theory also shifts attention to a country's resources rather than trade dynamics. Therefore, mercantilism is the most aligned with the idea of gaining national wealth through trade surpluses.

Mercantilism is the economic theory that asserts a nation's wealth and power are best served by increasing exports and accumulating precious metals like gold and silver. This notion dates back to the 16th to the 18th centuries and emphasizes that a favorable balance of trade—where exports exceed imports—leads to national prosperity. Under mercantilism, the government plays a significant role in regulating the economy and protecting domestic industries to enhance exports.

The focus on achieving a trade surplus underpins the idea that exporting more than importing leads to accumulating capital and strengthening a nation's economic position. In contrast, while concepts like absolute advantage and comparative advantage discuss trade benefits and efficiency, they do not focus specifically on the export-import balance as a measure of wealth. Factor Endowment Theory also shifts attention to a country's resources rather than trade dynamics. Therefore, mercantilism is the most aligned with the idea of gaining national wealth through trade surpluses.