An economy that trades with other countries is described as

• A. Interdependence (general)
• B. Globalisation
• C. Open economy
• D. Closed economy

Answer: (C)

The main idea here is openness to international trade. An economy that trades with other countries is an open economy because it conducts imports and exports and participates in cross-border financial flows. This openness allows a country to specialize according to comparative advantage and to access a wider range of goods and capital.

Interdependence is a result of these connections—countries rely on one another for goods, services, and capital—but the label that best describes the economy itself is open economy. Globalisation refers to the broader, deeper process of global integration across many dimensions, not just trade. A closed economy, in contrast, does not engage in international trade.