What is open economy??

open economy is a economic concept. you know what is two parties economy? it is the economy which only has parivate party and government. The only expenses are government and private expenses. Money will not leave this system, so the econmy is called closed economy.

Open economy is a similiar concept. It is the economy with exporters and importers. Money will leave or add into this system. For example, when HK imports goods form the US, money will leave HK and add into the US. Money flow can leave and come through the system, so the system is called open economy.

However, one thing we should bear in mind that, some HK officiers who have not studied much econ, give another special meanings to "open economy". They think a economy with much connection to other economies is called "open economy". Some others may also identify "open economy" as a economy with no barrier of captial flow. They seems to be the same concept, but in fact they are different. when you say "open economy", you may need to point out you use the term in eonomics study or public policy.

open economy is related with monetary policy and it also has some impact on the international policy.

For example, when a increase inflation in the small open economy, then the reserve bank might decide to do something like increase the interest rates to control the inflation.

i found a website and maybe useful to use. U can have a browse at the below link