physiocrats and the mercantilists Flashcards
what characterised the mercantilists thoughts?
Mercantilism was characterized by the view that money or gold was wealth and the only true form of wealth
what did the mercantilist believe about government spending?
Many of the bullionists did not agree to the idea that wealth should be used to increase the welfare of people
what is clipping?
reducing the metalic content of the currnecy in relation to face value
what did the mercantilists believe about trade?
due to the fact they wanted to keep their currency in their own country they encouraged the exports of goods in order to gain inflow of gold however they blocked imports as to keep a trade surplus. they were protectionists
how did the mercantillists believe they will maximise tax revenue?
The circulation of money within a nation was considedered to guarentee an extensive tax base, thus they wanted to prevent the outflow of precious metal
how did the mercantilists try to increase productivity?
They aimed to increase productivity within the nation by the creation of monopolies, state subsidies, tax exemptions to domestic businesses and importing advanced machinery, importing skilled labour, aquistion of manufacturing secrets from overseas
when did the mercantilists beleive maximum labour supply occured ?
they believed that the maximum labour supply occurs at subsistence wage-level
what theory of value do the mercantilists believe in?
They had a utility-based explanation of value. Some argued about the cost of production theories
where do the mercantilists believe profits from trade come from?
The profit gained from trading comes from the knowledge of the determinents of supply and demand In the market
what was the structure of the market the physiocrats believed in?
They aimed to divide the economy into two sectors , agriculture and manufacturing. they believed that agriculture was the only productive sector.
was the manufacturing industry considered by the physiocrats as productive?
no it was not productive.
what is depreciation?
the usage of inputs
what is the demand for manufacturing from?
The demand for output will come from the expenditure out of the rent or net product by the landowners they earned from agriculture.
why was the manufacturing industry dependent on the agricultural industry?
the manufacturing industry was dependent of the agricultural industry due to the fact that the workers survived of food from the agricultural plus the fact that the demand for manufactured goods relies on the profits from the agricultural profits
what is the relationship between total cost and revenue in the manufacturing industry?
revenue is equal to costs
