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closed economy


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A form of autarchy; an economy without contacts with the rest of the world by means of trade and movement of capital and labour. Examples of economies that existed as autarchies during certain periods in their history are Japan between the 1600s and the 1850s, Spain in the 1940s and 1950s, Albania in the late 1970s to mid-1980s, and currently North Korea; however, in almost all such cases some trade with neighbouring countries took place. A model of a closed economy is used in many theoretical applications as an abstraction, when the introduction of the outside trade, as well as the movement of capital and labour, may complicate the analysis without affecting the main issue under consideration.

Subjects: Economics.


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