Question

In which type of economy, domestic income is equal to national income?

• A. Open Economy
• B. Closed Economy
• C. Both (a) and (b)
• D. Neither (a) nor (b)

Answer 1

Answer: (B)

Closed Economy

In closed economy, domestic income is equal to national income, as there will be no net factor income from abroad as there is no such sector called external sector or 'rest of the world sector' in a closed economy structure.