Respuesta :
A 'closed economy' is a country that wants to be self-sufficient and limit their economic co-operation and interaction with other countries.
By defination, the country would not import from the outside world and niether would they export their products to other countries.
While it seems illogical today many countries have existed as closed economies in the past.
The most famous example is that of Japan which existed for centuries by practically cutting itself from the rest of the world.
In modern times, many countries wanted to become self-sufficient. Most famously, after the end of the second world war, India's prime minister, Nehru turned India into a very closed society.
The government imposes the restriction of no international trade in a closed economy.
Further explanation:
Brief about closed economy:
In a closed economy, there are only three sectors which are households, firms, and government. There is no foreign sector in a closed economy that can enable people to participate in foreign trade. With no chance for foreign trade, consumers have to buy goods and services domestically and producers have to sell goods in the nation only with no permit to sell in the international market.
Government restriction in the closed economy:
The government is the governing body in a closed economy and regulates the entire nation through policies. In a closed economy, the government restricts people to participate in international trade through various policies. The government makes sure that the producers get compensated for this by ensuring the same price domestically as the one prevailing in the international market. With the help of various policies and governance, the government makes sure that the nation does not enter into international trade and achieve the level of self-sufficiency.
Learn more:
1. Learn more about GDP and taxes.
https://brainly.com/question/4306898
2. Learn more about the inflation rate and the economy.
https://brainly.com/question/3310349
3. Learn more about the regulation of economy.
https://brainly.com/question/1026364
Answer details:
Grade: Senior school
Subject: Economics
Chapter: Introduction to micro-economics
Keywords: what restriction, would, the government impose, in a closed economy, in a closed economy there are only three sectors, international trade, restriction on trade, foreign sector, imports, exports, no entry in the international market, self-sufficiency, no trade.
