Mercantilism and Capitalism

Tariffs

A tax put on goods made in other countries

Mercantilism

An economic policy under which nations seek to increase their wealth and power by obtaining large amounts of gold and silver and by selling more goods than they buy.

Capitalism

An economic system characterized by private ownership and investment in the means of production (i.e., capital); a system in which economic decisions are based on supply and demand, competition, and price in a free market.

Market economy

An economic system in which prices are determined by the free exchange of goods and services with minimum government interference.

Joint Stock Companies

Businesses owned by shareholders that invested in exploration and colonization

Cottage Industry

Merchants started hiring peasants to make items in their homes (hence cottage being used)

Adam Smith

Scottish philosopher who wrote a "Wealth of Nations" advocated the idea of laissez faire; or government not involving themselves in the economy. Credited for beginning capitalism

Demand

The desire and ability of individuals to purchase economic goods or services at the market price. Along with supply, one of the two key determinants of price.

Supply

The quantities of a good or service that a firm is willing and able to make available for sale at varying prices (economic concept of supply and demand).

free enterprise

a type of economy in which people are free to buy, sell, and produce whatever they want

colony

country under the full or partial control of another country.

Columbian Exchange

global exchange of people, goods, technology, ideas, and diseases

bullion

gold and silver in the form of bars

Import

items that are bought from another country

entrepreneurs

people who risk their time, money, and other resources to start and manage a business

Export

sell to other countries

Commerce

the buying and selling of goods

Balance of Trade

the difference between a country's total exports and total imports

Middle class

the social group between the upper and working classes, including professional and business workers and their families.

Capital

wealth in the form of money or other assets owned by a person or organization