What characterizes a closed economy?

A closed economy is characterized by full self-sufficiency without international trade. This means that the economy does not engage in trading goods and services with other countries. It focuses entirely on its own production, consumption, and investment. A closed economy would rely solely on domestic resources and output to meet the needs of its consumers and businesses, ensuring that economic activities are contained within its borders.

In this context, the concept entails that all transactions, including imports and exports, are nonexistent. The focus is on local industries and economic activities, highlighting the lack of dependence on foreign resources or markets. This self-reliant approach distinguishes closed economies from those that engage in international trade, which can lead to economic interdependence and globalization.