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Difference Between Open and Closed Economy

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Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Fri, 13 Oct 2017

Task 1

  • Explain the differences in the operation of close and open economies by citing any relevant example to support your answer.

Introduction

Malaysia is a place of trading for business within the business is large or small. Every buying or trading also got sees the economic in Malaysia or country when they start their business. When the economics of each country is decrease they did not have any buyer or supplier will do business and invests in there. Example is North Korea. Open economic is mean can import and export with other country. That mean the country is a place to doing trading or business. The advantages for open economic for each of country is can do trading and gets a good product using trading and the disadvantage is high cost. The advantage for closed economic is don’t need to spend any money in trading and it also can increase the sale of their country product. Disadvantage for closed economic is can now get a satisfaction with other product because no choice and change the use any product are import because as a closed economy world they cannot doing trading with other country.

Main body

Close economic

Closed economic is a self sufficiency world without get any commendation from customer because they did got any trading with other country. They citizen also only can accepted and satisfied own country product because they only satisfied the product are process in own country is quality compare with other country.

Isolation

I choose North Korea as my closed economic because the country is controlled by army so the product also cannot go out the country using trading. They also cannot get a trading partner with other country like product and daily need because the entire thing is army prepare to citizen.

Trading cost

Why businesses don’t have in North Korea it is because when any trading are started the tax are taken by army is high. The citizen also can save move cost because no trading and transportation. The cost of trading also fix by army. So, the free for export and import is high. The army also got a law for citizen for their country for who are transport thing in own country. The things are want to transport out of the country also limited because they don’t want their country brand are using by other country citizen. The cost also will gain less cost compare with open economic because close economic transit cost is high than open economy. So when other country sales the thing is import from close economy world also cannot earn more profit when doing business.

Government decree

Government also will close the border through tax. Is because tax. Army will give high tax to who is import and export product in their country. They also fix the ruse and regulation for who are starting business trust import and export in their country. The military for closed economy compare with other country is military. For closed economic army got power to control their country compare with open economic because open economy is controlled by government. They also will take action to who is violation. Culture preference for closed economic citizen is can only trade with member in their country.

The product are produce by closed economy country is only satisfied citizen in their country compare with open economic product because open economic product is share to all citizen in different country and also will satisfied by different culture person. Their product is produces is only enough their citizen to eat and use. The main thing for their country will only import solar energy to keep the wheel production running. They only do trading with other country in their country because can save more cost. They also don’t care they product will decrease in demand of economic but open economic is maintain the demand of customer need and want to large their business.

Foreign exchange

The advantage for exchange in closed economic is different between open economic because close economic can maintain their foreign and open economic cannot maintain their country foreign exchange because the business of their country will increasing and decrease. Other advantages is they also don’t need to care about the foreign of other country is high because did get any exchange with other country.

Foreign worker

Different between closed and open economic is foreign for own country will increase and decrease and earn to other country citizen. Example like Malaysia worker like go to Singapore work and take the salary change back to Malaysia money. The foreign of Malaysia will increase. Good for closed economic is no resources out to other foreign country because all foreign worker are not allow to entry their country.

Benefit for closed economy

The citizen in their country can find job easily compare with open economy. The material also can use in own country because the quality of the product also will be maintain. All the benefit in close economy is give their citizen first to enjoy the life.

Open economy

The main point for open economic is using trade service with other country like international trade. The citizen also will satisfy their need and want of the product compare with the different brand of the product compare with closed economic because they can find the product can satisfied them. The customer also can compare the product are they use with other product. The supplier of the product also find the way to give the product got a strong brand compare with closed economic. Open economic also well in investment because can give own citizen have a change to invest in other country. The citizen also will get more benefit went the invest for other country foreign is increase. Our country also got import rice in Thailand and export palm oil to other country.

Economy difficulties

Open economic also will take action of the effect to the global compare with close economic is like financial problem. They can consume more product true import in a year. Customer also can get more choice because can taste different type of food and use different type of product compare with close economic. The citizen doing export and import is just can rely international as well as domestic because once for fund.

Gain from trade

At the trading way we also will earn a lot of profit when trade with other nation. The cost for trading also low because low tax are taken by government. When doing trading customer able to pay higher demand price than marker price because they order true from supplier so the price are getting is less. When order true supplier we will receive lower price compare with market price because true get the product with supplier.

Transit cost

The transit cost from other country is fair with other nation because all the price is selling to other country is fair. The product is more chipper than domestic because the way for trading is using transportation. The cost for import and export is low than closed economy.

The closed alternative

Closed economy is not same with open economy because closed economy is not engage with international trade.

Labor

As an open economic world they allow they citizen to migration to other country because the advantages is give their citizen changes to go outside country. Other than this also will increase the rate of labor in migration to other country because some of the country can get payment high and the opportunity of job also more.

Capital

The investment of the country also will increase when the country is famous because the rate for invest increase. Financial capital for invest also will increase because people invest more in their country. Lastly is physical capital will increase because more citizens, more factories and more products can product in a day.

Trading currency

The currency of the country will increase when export with other country. Trading currency rate will increase because buyer will buy the currency in our country so the trade of currency rate will increase.

Protecting the homeland

The other citizen worker come from other country will trade our country currency go to exchange their country currency so our currency in country will increase. The factory also will prepare balance good because want to attract more customer invest their factory. The living state of the country also will increases because place already advance. Other than this they also promote consumer satisfaction because can give customer more choice and got a good living place.

Conclusion

The different between closed and open economic is open economic is have a good service with other country and closed economic is only have a trade in own country. Open economic is can give company to choose the product are they want and need and closed economy is use own country product. Closed economic also no satisfaction with other country product. So, I think open economy is better than closed economy because without open economic we cannot try other country product in Malaysia.

Task 2

Discuss how a country could utilize its economic policies an equal wealth distribution among its populace

Introduction

At 1985, Malaysia is became education world because government aim more high qualification to their citizen at education. They also prepare the place to give citizen get a good place to study. Cost of study primary until secondary also free. Malaysia is a technology world so what is utilizes in any country. Normally Malaysia is an equal wealth distribution world compare with other country. How government is doing to give Malaysia has a wealth distribution world. Firstly government Malaysia plan to give student RM250 book Boucher to help student in study. Second is give RM650 to who family are lower income. Government also prepare RM100 room for who are income low can got a house to still. More citizens in Malaysia the richest and poor citizen will in the country. Compare with other country like Thailand Malaysia is the most better because nowadays economy in Thailand or India is decrease and also got some citizen are die because no food to eat. So, equal wealth distribution is very important in every country.

Main body

Comparison education in Malaysia and other country

Government aim every citizen got a high education because they want citizen got a same wealth distribution. Government will prepare free for charge for primary and secondary school because they want all citizens to have knowledge. Next, school also will prepare free food for people who are lower income can get food to eat compare with the school in Singapore because in there they must pay their free by them self because the cost of living style in Singapore is high compare with Malaysia. Government also prepares PTTN loan for who is lower income can get charge to study until high education. Malaysia also provide 1 Malaysia voucher to give the student in secondary school and college have a chance to buy book and stationary in book store because this will help them to save up their cost in study and also provide them 1 Malaysia card for college student to encourage them to study in college and increase their education standard. Malaysia government also provide multi certificate for college in Malaysia to attract more people go to Malaysia for study and the citizen in Malaysia also can enjoy the privilege that they do not need to go outstation to study also can get other country certificate and it also provide double diploma for student who study in Malaysia. Governments also care about their health and provide them athletic school and help them built their abilities in sports and help them built their body to be healthy.

How government can help lower income family

Government can provide the low income citizen of Malaysia with the program of BR1M. Governments introduce BR1M to help the poor people and senior citizen in Malaysia. BR1M is a ONE-OFF payment of RM 650 for household with the income less than RM 3,000. These financial statements are introduced by Malaysia government to lower down the burden for the low – income family in facing the rising cost of living style. BR1M also provide to the senior citizen who are 65 years and above because they do not have the power to work and they need money to buy their daily household and food. BR1M also help the poor to overcome their living style by providing them RM 650 every year to help them to reduce their burden. Government do the BR1M program is fair with each other who are lower income because this can help them to lower down their burden towards the household for every year.

How to overcome the poor

Government should provide more working chance for the people who are jobless and lower income to reduce the poor in Malaysia. Government should provide government taxes to both poor and rich to make it balance and fair to both because if the poor need to pay government than the rich will also need to pay government tax to make it fair for both. Government also can prepare more job for the poor to help them overcome their poorest and help them reduce their burden for the daily usage such as household because household is important for all people and also help them to reduce their burden for household.

Table for the Poor and Rich in Malaysia

http://psmkajang.files.wordpress.com/2013/10/iincomedisparity.jpg

The Wealth and Distribution

The wealth and distribution is to give both Poor and Rich to be fair because if not the economic in Malaysia will unbalance and will affect the poor to be poorest and the rich will be the richest. But if government apply government tax and service tax to both category this will help the poor and the rich to be balance in the economic.

Conclusion

As the conclusion, to balance both economic for the poor and rich the government needs to be fair to apply taxes for both category and apply BR1M for the poor to help them overcome their problem and help them lower their burden. For my suggestion, I agree what are government process the activities to give all the citizen got a wealth distribution compare with other country Malaysia is better.

Bibliography

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  2. Investopedia, (2010). Closed Economy Definition | Investopedia. [online] Available at: http://www.investopedia.com/terms/c/closed-economy.asp [Accessed 17 Jun. 2014].
  3. Investorwords.com, (2014). What is Economic Policy? definition and meaning. [online] Available at: http://www.investorwords.com/6501/economic_policy.html [Accessed 17 Jun. 2014].
  4. Ong, C. and profile, V. (2013). What Is BR1M (Bantuan Rakyat 1Malaysia) | Definition. [online] Br1m.info. Available at: http://www.br1m.info/2013/06/what-is-BR1M-peoples-cash-aid.html [Accessed 17 Jun. 2014].
  5. Suri, S. (2014). What are the differences between Closed economy and open economy ?. [online] Preservearticles.com. Available at: http://www.preservearticles.com/201103144509/closed-economy-and-open-economy.html [Accessed 17 Jun. 2014].
  6. W Timberlake, B. (1987). On the distinction between open and closed economies. Journal of the Experimental Analysis of Behavior, [online] 48(1), p.35. Available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1338743/ [Accessed 17 Jun. 2014].

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