1.) French physiocrats were one of two groups of people who opposed the Mercantilists in terms of their views of what makes a country wealthy. The physiocrats believed that the source of wealth was agriculture because everyone needs food to survive. For the physiocrats....Production = Wealth. The other group that opposed mercantilists were the Scottish Moral Philosophers, who said that good economics was about more than just discretion.
2.) Mercantilist sources of wealth include the amount of gold in the treasury, the king's finances, and the positive balance of trade. Mercantilists did not institute free trade. In other words, they did not want gold and silver to leave the country because they thought it made that country richer and England poorer. The King controls trade and they believed that money exclusively was the only sign of wealth.
3.) Hume....specie-flow mechanism. Prices fluctuate on their own when money enters and leaves a country = Law of One Price.
4.) Trade does 3 things:
- Competition
- Learning and innovation
- Division of labor
All three contribute to the progression and improvement of the economy.
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