NAME ______________________________________ DATE _______________ CLASS _________
Economics of History Activity
netw rks
The Age of Exploration
Mercantilism: The Gold Standard
For thousands of years, trade was based on the
barter system—the exchanging of goods or services.
As nations became powerfully wealthy, new ideas
took shape about exactly what wealth meant.
Economics Terms to Know
mercantilism an economy based
on gold or money
balance of trade the difference
between the value of exports and
By the eighteenth century, mercantilism had
imports
become a popular economic theory across Europe.
According to mercantilism, the amount of wealth in
subsidy money paid by a
the world was fixed, and a nation could only increase
government to an industry to keep
its wealth by reducing the wealth of another nation.
the price of a product competitive
Wealth was measured by a nation's supply of gold.
If a nation did not have its own mines, it had to
acquire its gold and other precious metals through trade. A country traded
its raw materials for gold or silver, thereby strengthening its economy.
Colonies became farms and factories for raw materials that the home country
sold to other countries. To maintain a balance of trade, nations tried to buy
less than they sold, or export more than they imported. Governments paid
their colonists subsidies to encourage them to produce more raw materials
and to reduce their need to import goods from other countries.
Applying Economics to History
1.
Using Context Clues Using information from the passage, explain
the meanings of the three boldfaced words:
mercantilism:
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balance of trade:
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subsidies:
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2.
Analyzing How did the concept of mercantilism influence the spread
of new foods, plants, and animals around the world?
________________________________________________________
________________________________________________________
Copyright © The McGraw-Hill Companies, Inc. Permission is granted to reproduce for classroom use.
Raw materials from around the world found new markets, creating new
demand and increasing trade. Eventually, however, people began to view
mercantilism as an illusion. Critics said that restricting imports only hurt
the economy and that free trade—open imports and exports between
nations—would create a healthy economy for everyone.
NAME ______________________________________ DATE _______________ CLASS _________
Economics of History Activity Cont.
netw rks
The Age of Exploration
3.
Identifying Central Issues Why did governments pay their
colonists subsidies?
________________________________________________________
________________________________________________________
________________________________________________________
4.
Making Inferences Why do you think the idea of mercantilism
became so popular?
________________________________________________________
________________________________________________________
________________________________________________________
Copyright © The McGraw-Hill Companies, Inc. Permission is granted to reproduce for classroom use.