An open economy is characterized by what?

An open economy is best characterized by exporting and importing activities. This type of economy actively engages in trade with other countries, allowing for the exchange of goods and services across borders. Such engagement facilitates access to a wider variety of products and resources than what might be available domestically, fosters competition, and can lead to efficiency and innovation.

In an open economy, not only do local businesses get the opportunity to expand their market reach internationally, but consumers also benefit from a greater selection of products and often lower prices due to increased competition. This dynamic enhances overall economic growth and provides a platform for participating in the global market.

In contrast to this, the other options reflect characteristics of a closed or more restrictive economy. For instance, an economy with no international trading would signify isolation from global markets, while self-sufficiency denotes a focus on domestic production without reliance on international trade. Government-regulated trade might describe particular trade policies, but it doesn't inherently define an open economy, which fundamentally involves active participation in global markets.