State the differences between Closed and Open Economies.

Answer»

Closed Economy	Open Economy
(i) A closed economy is that which does not have any trade links with other countries of the world.	(i) An open economy is that economy which has all kinds of economic relations with other countries of the world.
(ii) It completely prohibits import and export trade.	(ii) It allows for export and import trade.
(iii) It is policy of protection which between domestic and foreign goods.	(iii) It is free trade policy and allows the inflow and outflow of foreign direct investment. (FDI)

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