An open economy is an economy that is involved in the process of production within its own country and participates in the production process anywhere in the world. And a closed economy is an economy that has no economic transactions with any other country. The Main Differences between Open Economy and Closed Economy are
Difference between Open Economy and Closed Economy
| Closed Economy | Open Economy |
|---|---|
| Does not have economic relations with the rest of the world. | Has economic relations with other countries. |
| Activities taking place outside the territory do not affect economic activities. | The economic activities of such an economy are affected by international fluctuations. |
| There is no difference between national income and domestic income. | The size of national income may be greater or smaller than domestic income. |
| It is an imaginary economy. | It is a real economy. |
Also, Read Difference between Developed and Underdeveloped Economy