Differences between open and closed economy
Basis | Open economy | Closed economy |
1. Economic relation | It has an economic relationship with the rest of the world. | It has no economic relationship with the rest of the world. |
2. Import and export | It is involved in the import and export of goods and services. | It is not involved in the import and export of goods and services. |
3. Borrowing and lending | An open economy borrows and lends money. | A closed economy neither borrows nor lends money. |
4. Foreign aid | It takes and gives foreign aid. | It neither takes nor gives foreign aid. |
5. Movement of workers | It allows inward and outward movement of workers. | It does not allow inward and outward movement of workers. |
6. Remittance | An open economy receives remittance. | A closed economy does not receive remittance. |
7. Realistic and theoretical | It is a realistic concept because all the economies of the world are open economies. | It is only a theoretical concept because there are no closed economies in the world. |
8. Equality between GDP and GNP | In this economy, GDP and GNP are different. | In this economy GDP and GNP are equal. |
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