Explanation:

? An open economy is one that trades with other nations in goods and services and, most often, also in financial assets. Indians, for instance, enjoy using products produced around the world and some of our production is exported to foreign countries. Foreign trade, therefore, influences Indian aggregate demand in two ways. 

• First, when Indians buy foreign goods, this spending escapes as a leakage from the circular flow of income decreasing aggregate demand. Second, our exports to foreigners enter as an injection into the circular flow of the domestic economy. This increase in the circular flow of money in the domestic economy can lead to an increase in demand for all finished goods and services produced in the domestic economy. Consequently, this can lead to an increase in aggregate demand for domestically produced goods as well as imported goods. Hence, statement 2 is correct. 
• Total foreign trade (exports + imports) as a proportion of GDP is a common measure of the degree of openness of an economy. In 2015, this was close to 45% and 38.9% in 2004-2005. This is substantially higher than a total of 16 percent that prevailed in 1985-86. However, in comparison to other countries, India is relatively less open. There are several countries whose foreign trade proportions are above 50 percent of GDP. Hence, statement 1 is correct.