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In which type of economy, domestic income is equal to national income?
OPen economy
Closed Economy
Both a and b
Neither a nor b
- Closed Economy:
- A closed economy is one that does not engage in international trade.
- Domestic income is equal to national income because there are no imports or exports.
- All income generated is from domestic production and consumption.
- This is the correct answer.
- Open Economy:
- An open economy engages in international trade.
- Domestic income may not equal national income due to imports and exports.
- National income includes net income from abroad.
- Both a and b:
- This option is incorrect because only a closed economy ensures domestic income equals national income.
- Neither a nor b:
- This option is incorrect because a closed economy satisfies the condition.
By: santosh ProfileResourcesReport error
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