Question

The ‘Closed Economy’ is the economy in which
1. Only export takes place.
2. Budget deficit is less.
3. Only import takes place.
4. There is no foreign trade.

Answer 1

Correct Answer - Option 4 : There is no foreign trade.

The correct answer is There is no foreign trade.

• A closed economy is one that has no trading activity with outside economies.
• The closed economy is therefore entirely self-sufficient, which means no imports come into the country and no exports leave the country.
• An economy in which no activity is conducted with outside economies. For eg. - Morocco, Algeria, etc.
• A closed economy is self-sufficient meaning that no imports are brought in and no exports are sent out.
• The closed economy goal is to provide consumers with everything that they need from within the economy's borders.

• A closed economy is completely self-sufficient, with no imports or exports from international trade.
• The need for raw materials produced elsewhere that play a vital role as inputs to final goods makes closed economies inefficient.
• A government may close off a specific industry from the international competition through the use of quotas, subsidies, and tariffs.
• In reality, there are no nations that have economies that are completely closed.

• Economic systems can be categorized into four main types:
  • ​Traditional economic system.
  • Command economic system.
  • Market economic system.
  • Mixed system.