Question

A 'closed economy' is an economy in which?
1. Money supply is fully controlled
2. Losses are financed
3. Only exports are done
4. Neither exports nor imports are done

Answer 1

Correct Answer - Option 4 : Neither exports nor imports are done

The correct answer is Neither exports nor imports are done.

• A closed economy is one that has no trading activity with outside economies.
• The closed economy is entirely self-sufficient.
• It means no imports come into the country and no exports leave the country. 
• In other words, A closed economy is one that does not swap their trading with outside.

• Open Economy:
  • An economy in which participants are permitted to buy and sell goods and services with other countries.
  • The GDP of open economies includes exports and imports.
  • Some very open economies try to have few or no trade restrictions.