Lesson # 3 – Mercantilism

Agenda Warm Up: Notebook Quiz Mercantilism – Reading Balance of Trade – Equations Colonization – WHY?!?!

Thursday, March 20 Page 91 Bell Ringer: Notebook Quiz 10:00 to complete Objective: Explain how the desire for expanding markets and increasing profits lead to colonization. Attach reading on Mercantilism (for future reference) Page 92 Leave blank, title “Mercantilism” Page 93 Leave blank, title “Colonization” Page 94 Leave blank, title “Adam Smith”

Competition of Strength I need two competitors Who thinks that he/she is the strongest person in the room?

Debrief Why was __________ stronger? How can we make __________ stronger?

What does this have to do with class?

What is mercantilism? Page 92mercantilism An economic policy that said a nation’s strength was determined by its wealth Five key points: What – an economic policy Why – money is important Who – western nations (Europe and America) How – For one nation to become wealthier – and therefore more powerful – it had to take wealth and power from another nation When/Where – Europe in 1500/1600s

Balance of Trade Pg 92 With your partner, write an equation. Any subtraction equation. Now think: you are a merchant selling coats. Do you want to get out what you put in? NO!! Why are you selling coats? TO MAKE MONEY! You want to sell (finished goods) more than you buy (raw materials) Money made – money spent = profit OR Exports – imports = profits E – i = profit

Brainstorm How can a nation achieve a favorable balance of trade? Remember – this is economics (war is not the answer) For example, how can one nation become stronger than another? How can we make E big and I small? Think of three ways it can be done. If you want to use the merchant as an example, go ahead.

Balance of Trade: Achieved What are the three ways it is achieved? Reduce imports from other nations Sell expensive exports Control raw materials COLONIZE Draw an image to depict each of these methods to achieve a favorable balance of trade

Colonization – Page 93 The Need for Raw Materials Read about the need for colonies on page (the section titled “Colonies”) in the textbook Answer the following questions in your notebook: Why did colonies benefit their mother country? Why did monarchs restrict the economic activities of their colonists? How do you think the colonists felt about the limitations being placed on their freedoms? Write one argument why it is OK to limit freedoms. Write one argument why it is NOT OK to limit freedoms.

Adam Smith “The Wealth of Nations” Adam Smith was an economist Two main points: He believed mother countries (and people) could only create wealth when they were allowed to do as they wanted without any interference from the government If a colony wasn’t making its mother country money, it should be abandoned

A free market economy that is guided by “the invisible hand” or laissez-faire (French word for “leave alone”) A free market economy That means… If a nation wants to colonize and is able to colonize, it can! If a company wants to charge $$$ for a product and people are willing to pay for the product, it can. If a company wants to pay its employees $ and they will still work, it can. OR…as long as people are buying and selling goods and services, no one can tell them not to! Adam Smith believed in something called…

In other words The government should not be involved in the affairs of business. Whatever a business can get away with … it should. Do you agree or disagree with this? Give three reasons why/why not. EXIT TICKET