ECONOMICS AND HISTORY ACTIVITY 3

Mercantilism is an economic theory that connects a country's wealth to its supply of gold and silver.

Raw materials are the different products that are used to make finished products. Finished products are ready for consumption by the public.

Adam Smith was an economist who wrote The Wealth of Nations. His book formed the basis of our capitalist economy.

Mercantilism is an economic system in which the government answers the three economic questions; capitalism is an economic system in which the consumer and business owners answer the three economic questions.

A positive trade balance would mean that a country was earning more than it was spending on products. This is a way of creating savings, or increasing the supply of gold and silver.

Answers may vary. Sample response: Labor may have value because it is willing to do a job few people want (such as a sanitation worker). Labor may have value because it requires special training (such as an electrician). It may have value because it provides something that society holds in high esteem (such as a movie star).

Answers may vary. Sample response: land—the property that my house is built on; labor—my teacher works in the school teaching students like me; capital—my mother uses her computer to do her job; entrepreneurial ability—the owner of the new electronics store on Main Street