A “closed economy” is an economy in which

1. the money supply is fully controlled
2. deficit financing takes place
3. only exports take place
4. neither exports nor imports take place

Explanation

Option (d) is correct

• A closed economy is one that does not swap their trading with outside economies. The closed economy is independent, meaning no imports enter the country and no exports leave the country.
• A closed economy aims to provide all that domestic consumers need from within the boundaries of the country.

Answer: (d) neither exports nor imports take place | Difficulty Level: Easy