Foreıgn Trade Deneme Sınavı Sorusu #1404020
According to David Hume’s “the specie-flow theory” what happens to the prices of goods in that country if a country’s net exports increased and more gold flowed into a country?
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the prices of goods in that country would do not change, |
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the prices of goods in that country would rise, |
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the prices of goods in that country would decrease, |
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the prices of goods in that country would rise one year and decrease in following year, |
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the prices of goods in that country do not depend on trade, |
THE RISE OF INTERNATIONAL TRADE THEORY AND MERCANTILISM
David Hume constructed what has become known as the specie-flow theory of the movement of money and goods between nations to assure equilibrium among international prices and the distribution of specie (or commodity) money among countries that are trading with each other. Hume explained that as net exports increased and more gold flowed into a country to pay for them, the prices of goods in that country would rise. Thus, an increased flow of gold into England would not necessarily increase England’s wealth substantially.
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