Mercantilism Indicator 7-1.3 Summarize the policy of mercantilism as a way of building a nation’s wealth, including government policies to control trade.

Why Mercantilism was Developed Colonial expansion and global trade changed the economy of Europe. The economy of Europe became more complex and moved beyond simple feudalism. Because of these changes, Europeans developed a new system: mercantilism.

What Mercantilism is and How it Works Purpose: to regulate or control trade to build the nation’s wealth. Regulating trade creates a favorable balance of trade. This means exports > imports. Exports are what a country sells to other countries. Imports are what a country buys from other countries. Mercantilism requires colonies: Sources of raw materials Markets for the mother country’s manufactured goods How trade was regulated: Colonies only allowed to trade with the mother country tariffs (taxes on trade) on imports to discourage people from buying them