PDSnet Glossary

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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

This is an economy which allows free trade both internally and externally with its trading partners. Such an economy has the minimum of trade barriers such as tariffs and quotas. In economic theory, any intervention in the free market has a cost and hence government interference should be kept to a minimum to maximise the economy's productivity. A closed economy does not allow free trade and places onerous restrictions on the movement of people. Such economies tend to lag behind both on economic growth and the advancement of technology.

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