Definition Mercantilism is an economic theory holds that the prosperity of a nation is dependent upon its supply of capital, and

that the global volume of international trade is unchangeable. -Wikipedia Explanation To encourage export, Government can impose tax or other charges on import. This can help to promote sales and to earn more Gold or Foreign currency. It will help to prevent Trade deficit and experience Trade Surplus. The Suggestions by Mercantilism theory can be summarised as-Country should have more Export than Import in Monetary Value -So country can experience Trade Surplus - Government can help to improve export by imposing tax and some other charges on import -Maintain favorable balance of Trade Decay of Gold Standard reduced the validity of this theory and then this theory was modified and named as Neo-Mercantilism.