When analyzing economic situations in an open economy instead of a closed economy, one must take into account:

Question

Quizplus · Accepted Answer

In an open economy, international transactions can create an imbalance in the current account, so that GDP is not necessarily equal to GNI or GNE. This means that it is important to take into account factors such as international trade, foreign investment, and exchange rates when analyzing economic situations in an open economy. A is incorrect because intermediate goods and services play an important role in the production process and should be considered. B is relevant, but it is only one factor to consider.

C is incorrect because while international political relationships may have an impact on the economy, they are not necessarily unique to open economies and may also apply to closed economies.

When Analyzing Economic Situations in an Open Economy Instead of a Closed