Advanced Placement (AP) European History Practice Exam

What economic policy did European monarchs typically follow in the 1700s to promote trade and consumption of luxury items?

1. Free trade agreements with other nations

2. Mercantilist policies that protected domestic industries and encouraged the creation of colonies

3. Promotion of agricultural exports

4. Taxation of luxury goods to reduce consumption

The correct answer is: Mercantilist policies that protected domestic industries and encouraged the creation of colonies

European monarchs in the 1700s primarily adopted mercantilist policies as a means to stimulate their economies, particularly through the promotion of trade and the consumption of luxury items. Mercantilism was centered on the idea that a nation's strength and wealth depended on its accumulation of precious metals and the ability to maintain a favorable balance of trade. To implement these policies, monarchs enacted regulations that protected domestic industries from foreign competition, encouraging the production of high-value goods, including luxury items. Additionally, they sought to expand their empires through colonial ventures, as colonies served as both sources of raw materials and markets for manufactured goods. This system fostered economic self-sufficiency where monarchs aimed to decrease reliance on foreign imports and boost local consumption. This context illustrates how mercantilist practices were crucial in shaping trade strategies during this period, ultimately enhancing national wealth and power through the promotion of both industry and luxury consumption.