Economists sometimes use a closed economy model despite the fact of trade with the rest of the world because:

Question

Quizplus · Accepted Answer

The world as a whole can be considered a closed economy because it does not trade with any external entities. For large economies, the proportion of exports and imports relative to GDP can be small, making the closed economy model a reasonable simplification. Additionally, using a closed economy model simplifies the analysis by focusing on domestic economic activities without the complexities of international trade.

Economists Sometimes Use a Closed Economy Model Despite the Fact