If a nation has an open economy it means that the nation ______________.

allows private ownership of capital

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has flexible exchange rates

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has fixed exchange rates

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conducts trade with other countries

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Solution

The correct option is C conducts trade with other countries
Open economy means that the nation exports and import in goods and services very freely following the rules and regulations of world trade organisation with both fixed as well as flexible exchange rates.

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Similar questions

(a) What is foreign exchange rate?

(b) How it is determined under fixed and flexible exchange rate system?

(a) What causes disequilibrium in BOP?

(b) Why is flexible exchange rate better than fixed exchange rate system?

Differentiate between the following:
(a) BOT and BOP
(b) Fixed and Flexible exchange rates

Q25. Which of the following statements are correct?

1. A mixed economy refers to market economy with strong regulatory oversight and governmental provision of public goods.

2. A socialist economic system is characterized by social ownership and democratic control of the means of production.

3. Capitalism is an economic system in which capital goods are owned by private individuals.

4. Marxian economics provided a foundation for capitalism.

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