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Commercial Revolution

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by

Alexia Kunkle

on 2 October 2013

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Transcript of Commercial Revolution

Commercial Revolution
*Inflation*
Rise in prices linked to an increase in money supply
Money supply greatly increased in Europe as gold and silver were brought back from the New World
Out with the Guilds
"putting out system"-
Merchants bought and distributed wool to peasant cottages
Cottagers spun and wove the cloth
Merchants paid cottagers, took the goods to market
Made BIG profits
Capitalism
Economic system where most businesses are owned by privately
Entrepreneurs- People who take financial risk
to make profits. (key to capitalism)
In the 1500's, this period of inflation was known as the Price Revolution
Banks increased allowing for money lending for profit
New Business Methods
Bookkeeping to show profits and loss
Joint stock companies allowed people to pool money for overseas ventures
Mercantilism
Nation's wealth is based on its gold and silver supplies
A nation must export more than it imports
Colonies supplied the perfect way to increase Mercantilists goals
Provided resources and raw materials not
available in Europe
Provide a market for manufactured goods
Impact of New Economic System
Increase in national wealth of colonial powers
Tariffs (taxes) on foreign products
Why?
1. Merchants became rich
2. Land owners (Nobles) were hurt by Price Revolution
3. Skilled workers became middle class
4. Peasants still predominated and suffered
MARKET ECONOMY
Economic system where supply and demand regulate the economy, rather than government intervention
Laissez Faire-HANDS OFF!!!!

This was a rejection of Mercantilism
Adam Smith
16th Century English Economist

Argued that demand for goods would produce a supply of those desired goods

Impact on the world's developing economy
1. Increased competition
2. Increased trade opportunities
3. Increased innovation
4. Increased opportunities for individuals
Full transcript