If a nation has an open economy it means that the nation ?
Correct answer: D. conducts trade with other countries
- A. Allows private ownership of capital
- B. Has flexible exchange rates
- C. Has fixed exchange rates
- D. conducts trade with other countries
Explanation
An open economy participates in international trade in goods and services. Private ownership and the choice between fixed or flexible exchange rates do not by themselves define an open economy.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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