Question

Which of the following correctly lists the three main channels through which an open economy interacts with the rest of the world?

Options

• Export market, import market, and currency market

• Output market, financial market, and labour market

• Money market, stock market, and bond market

• Goods market, services market, and asset market

Answer 1

An open economy interacts with the rest of the world through three main linkages: the output market (trade in goods and services), the financial market (borrowing, lending, and trading of financial assets), and the labour market (international movement of labour).