A “closed economy” is an economy in which:
✓ Correct answer: d) Neither exports or imports take place
ExplanationClosed EconomyDoes not have economic relations with the rest of the world.Activities taking place outside the territory do not affect the economic activities.There is no difference b/w national income and domestic income.It is an imaginary economy.A closed economy is completely self- sufficient, which means that no imports enter and no exports leave the country.Open Econ- omyAn open economy has economic relations with other countries.Economic activities of such an economy are affected by international fluctuations.The size of national income may be greater or smaller than the domestic income.It is a realistic economy.Eg: USA, Singapore, Finland, etc. 369
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