The Republic of Argonia, owing to its vast resources of arable land an

QUESTION

The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation.

It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from exports. Which of the following theories prohibits such international trade?

A. New trade theory

B. Product life-cycle theory

C. Mercantilism

D. Heckscher-Ohlin theory

E. Theory of national competitive advantage

ANSWER

C