An economy assumed not to take part in international trade, so that it has no exports or imports. Though no such economy exists in the real :world, the assumption is a useful . simplification when examining how total expenditures on consumption and investment and government expenditure and taxation interact to determine the levels of national income and employment. It reflects the typical device used in economics of starting off with a highly simplified mode! and gradually introducing additional complications .
|Reference: The Penguin Dictionary of Economics, 3rd edt.|