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Mind Map: Open Economy | Economics Class 12 - Commerce

The document Mind Map: Open Economy | Economics Class 12 - Commerce is a part of the Commerce Course Economics Class 12.
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FAQs on Mind Map: Open Economy - Economics Class 12 - Commerce

1. What is an open economy?
Ans. An open economy is one in which there are economic activities between the domestic community and outside. It allows the flow of goods, services, and capital across international borders.
2. How does an open economy differ from a closed economy?
Ans. In a closed economy, there are no international trade or financial transactions, while in an open economy, there is trade and capital flow between countries.
3. What are the benefits of an open economy?
Ans. Some benefits of an open economy include increased competition, access to a wider range of goods and services, and opportunities for economic growth through foreign investment.
4. What are some challenges of operating in an open economy?
Ans. Challenges of operating in an open economy include exposure to international market fluctuations, competition from foreign businesses, and the risk of capital flight.
5. How does government policy influence an open economy?
Ans. Government policy can affect an open economy through trade agreements, tariffs, subsidies, and regulations that impact the flow of goods, services, and capital across borders.
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