A “closed economy” is an economy in which
- Athe money supply is fully controlled
- Bdeficit financing takes place
- Conly exports take place
- Dneither exports nor imports take placeCorrect
Explanation
A closed economy is a self contained economic system that does not engage in international trade. This means there is no exchange of goods, services, or capital with other countries. Since the economy is isolated from the global market, neither exports nor imports take place. In such a system, all consumption and investment rely solely on domestic resources and production. This distinguishes it from an open economy, where international trade and financial transactions are integral components. Therefore, option D is the only definition that accurately describes the lack of external trade characteristic of a closed economy.
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