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Which among the following could be said to be an 'Open Economy'?
- a)A nation that follows the doctrine of Free-market and Laissez-faire economics
- b)A nation that trades with other nations in goods and services and financial assets
- c)An economy that operates without government intervention
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which among the following could be said to be an Open Economy?a)A nati...
An open economy refers to a country that engages in international trade, including the exchange of goods, services, and financial assets with other nations. This type of economy is characterized by its openness to global markets and competition, allowing for the movement of resources, products, and investments across borders. In an open economy, businesses and individuals can import and export goods and services, invest in foreign markets, and borrow or lend capital with other countries.
Option 1, which refers to free-market and laissez-faire economics, describes an economic system with minimal government intervention, but it does not necessarily imply that the economy is open to international trade. Option 3, an economy without government intervention, is also not necessarily an open economy, as it does not directly address international trade.
Option 1, which refers to free-market and laissez-faire economics, describes an economic system with minimal government intervention, but it does not necessarily imply that the economy is open to international trade. Option 3, an economy without government intervention, is also not necessarily an open economy, as it does not directly address international trade.
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Which among the following could be said to be an Open Economy?a)A nati...
Open Economy:
An open economy is a type of economy that engages in international trade and economic transactions with other nations. It allows the free movement of goods, services, and capital across its borders. In an open economy, the country's economic activities are not restricted to domestic markets but expand to the global market.
Explanation of the options:
a) A nation that follows the doctrine of Free-market and Laissez-faire economics: While a nation that follows free-market and laissez-faire economics promotes economic freedom and limited government intervention, it does not necessarily imply that the country is engaged in international trade or has an open economy. Therefore, option (a) is not the correct answer.
b) A nation that trades with other nations in goods and services and financial assets: This option accurately describes an open economy. When a country engages in international trade, both in terms of goods and services as well as financial assets like stocks, bonds, and currencies, it indicates the integration of the country's economy with the global economy. This openness allows for the exchange of resources, ideas, and opportunities, leading to economic growth and development. Therefore, option (b) is the correct answer.
c) An economy that operates without government intervention: While an economy operating without government intervention may promote economic freedom and a free market system, it does not necessarily mean that the country is engaged in international trade. Government intervention can vary across economies, and even in an economy with limited government intervention, international trade could still be restricted. Therefore, option (c) is not the correct answer.
Therefore, the correct answer is option (b) - a nation that trades with other nations in goods and services and financial assets.
An open economy is a type of economy that engages in international trade and economic transactions with other nations. It allows the free movement of goods, services, and capital across its borders. In an open economy, the country's economic activities are not restricted to domestic markets but expand to the global market.
Explanation of the options:
a) A nation that follows the doctrine of Free-market and Laissez-faire economics: While a nation that follows free-market and laissez-faire economics promotes economic freedom and limited government intervention, it does not necessarily imply that the country is engaged in international trade or has an open economy. Therefore, option (a) is not the correct answer.
b) A nation that trades with other nations in goods and services and financial assets: This option accurately describes an open economy. When a country engages in international trade, both in terms of goods and services as well as financial assets like stocks, bonds, and currencies, it indicates the integration of the country's economy with the global economy. This openness allows for the exchange of resources, ideas, and opportunities, leading to economic growth and development. Therefore, option (b) is the correct answer.
c) An economy that operates without government intervention: While an economy operating without government intervention may promote economic freedom and a free market system, it does not necessarily mean that the country is engaged in international trade. Government intervention can vary across economies, and even in an economy with limited government intervention, international trade could still be restricted. Therefore, option (c) is not the correct answer.
Therefore, the correct answer is option (b) - a nation that trades with other nations in goods and services and financial assets.
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Which among the following could be said to be an Open Economy?a)A nation that follows the doctrine of Free-market and Laissez-faire economicsb)A nation that trades with other nations in goods and services and financial assetsc)An economy that operates without government interventiond)None of the aboveCorrect answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which among the following could be said to be an Open Economy?a)A nation that follows the doctrine of Free-market and Laissez-faire economicsb)A nation that trades with other nations in goods and services and financial assetsc)An economy that operates without government interventiond)None of the aboveCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which among the following could be said to be an Open Economy?a)A nation that follows the doctrine of Free-market and Laissez-faire economicsb)A nation that trades with other nations in goods and services and financial assetsc)An economy that operates without government interventiond)None of the aboveCorrect answer is option 'B'. Can you explain this answer?.
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