What is "Mercantilism"?

Mercantilism is defined as an economic theory that emphasizes state control over trade and the economy. It emerged in the late Middle Ages and was prominent in Europe during the 16th to 18th centuries. The core principle of mercantilism is that a nation's strength is directly related to its wealth, particularly in terms of precious metals like gold and silver. Governments under mercantilist policies often sought to regulate the economy to enhance national power through accumulating wealth.

Mercantilist policies typically included protecting domestic industries through tariffs and monopolies, establishing colonies to supply raw materials, and controlling trade routes. This approach aimed to achieve a favorable balance of trade, meaning exporting more than importing to increase national wealth.

In contrast, the other choices represent different economic theories. Advocating for free trade aligns more closely with classical economics, which emerged after the decline of mercantilism. A focus on agricultural production would be more indicative of agrarian theories, while favoring individual entrepreneurship relates to capitalist ideologies that oppose heavy government control. Thus, the key characteristic of mercantilism is its advocacy for state intervention and control in economic affairs, making it the correct choice.