4. One of the flaws of mercantilism was a failure to understand the connection between a. an increase in the domestic money supply (which usually followed a trade surplus) and the aggregate price level. b. politics and economics. c. imports and exports. d. exports and bullion.
Answer: The correct option is C.
The primary condition for trade is marchantalism. The aim of this marchantalism is to increase the economical strength of one country by exporting more and importing less. Import of a country can be reduced by the government intervention. Government impose tariff and quota to limit the import. If import decrease then domestic production increase and export them by which country earn foreign currency more and this increase the economic strength of the country. Germany, France , Italy and other many countries are adopted marchantalism to strengthen the economy.
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