David Hume's price-adjustment mechanism supported the mercantilist view that a nation could maintain a trade surplus indefinitely.

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David Hume's price-adjustment mechanism, also known as the gold-specie flow mechanism, actually contradicted the mercantilist view. Hume argued that if a nation had a trade surplus, it would lead to an inflow of gold and silver, causing inflation and a rise in prices. This rise in prices would make exports more expensive and imports cheaper, leading to a decline in exports and an increase in imports, eventually resulting in a balance of trade equilibrium. Therefore, a nation could not maintain a trade surplus indefinitely.

David Hume's Price-Adjustment Mechanism Supported the Mercantilist View That a Nation