Mercantilism is best described as which of the following?

• A. A system that encourages free trade between colonies
• B. An economic policy that aims to build wealth through a favorable balance of trade for the mother country
• C. A political movement advocating independence
• D. A monetary policy controlling inflation

Answer: (B)

Mercantilism is an economic policy where a country seeks to increase its wealth by accumulating precious metals and by maintaining a favorable balance of trade—exporting more than it imports—for the benefit of the home country, often using colonies to supply raw materials and serve as markets. That’s why the best description is the one that says wealth is built through a favorable trade balance for the mother country. It reflects government regulation and protection of trade to keep wealth inside the empire. The other descriptions don’t fit: free trade among colonies goes against mercantilist restrictions, independence movements are political goals, and controlling inflation is a monetary concern not the central aim of mercantilist policy.