Practice Quiz

CLEP US History I

Category - Economy

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Which of the following statements best explains the theory of mercantilism?
  1. Industrial profits should be reinvested in empire to improve the standard of living there.
  2. The more wealth that is distributed among the colonists, the better the state will be.
  3. Competition for finite resources will lead to overpopulation or conflict.
  4. The ruling merchant class maintains all discernible political power.
  5. Colonies trade exclusively with the mother country in exchange for maintenance.
Explanation
Answer: E - The economic theory of mercantilism was based on the idea that nations made money by creating colonies and gaining a monopoly on their trade. It was a motivating factor in the creation of the American colonies, as well as European colonization of India and the Near East. The colonists disliked it since they often had to pay higher prices, so it also encouraged smugglers to bring foreign good into the colonies more cheaply.
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