What does GDP equal to in a closed economy? - ProProfs Discuss
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What does GDP equal to in a closed economy?

What does GDP equal to in a closed economy?<br/>

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Asked by Muhammadakram, Last updated: Nov 09, 2024

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Markda John

Markda John

Markda John
Markda John

Answered Apr 02, 2018

A closed economy, by definition, doesn’t export or import anything. Therefore, there isn’t a reason to use the net exports part of the equation. The best answer I can give for this question is that the proper GDP equation is C + I + G. C means consumption, I means investment and G means government purchases. In short, the GDP is determined by what the people of the country buy, what the government buys, and what people invest in. In an open economy, there is another part to the equation: NE. This is the net export amount.

A good example of a closed economy to study would be China between 1950 and 1980 or so. They closed the economy off to imports and exports.

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muhammadakram

muhammadakram

muhammadakram
Muhammadakram

Answered Oct 13, 2017

C+i
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