A large open economy
A)dominates world trade in one or more products.
B)is physically larger than all small open economies.
C)has a larger population than all small open economies.
D)lends or borrows enough in the international capital market to influence the world real interest rate.

Question

Quizplus · Accepted Answer

A large open economy is characterized by its ability to lend or borrow significant amounts of capital in the international capital market. This activity can have an impact on the world real interest rate, making it the correct answer. While a large open economy may dominate world trade in certain products, this is not a defining characteristic of the category. The physical size or population of an economy does not necessarily determine whether it is large or small in economic terms.

A Large Open Economy