A closed economy a. does not engage in international trade of goods and services. b. does not engage in international borrowing or lending. c. both A and B d. engages in international borrowing and lending.

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12 June, 11:05

A closed economy a. does not engage in international trade of goods and services. b. does not engage in international borrowing or lending. c. both A and B d. engages in international borrowing and lending.

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Sheldon Zavala · Answer 1

The correct option is C, both A and B

Explanation:

A closed economy is not opened to the idea of international trade, where its surplus commodities can be traded with other nations of the world in order to earn foreign exchange while at the same procuring from trading partners products required by its nationals not available at all in the economy or the ones that are not available in the required quantity.

A closed economy also assumes itself to be sufficient in the area of fiscal policy management by not engaging in international borrowing or lending arrangements.