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September 12, 2023

Taxes in a Closed Economy

Taxes are a sum of money imposed on people, goods, services and properties by the government of a nation to generate revenue. This revenue is then used for the development of various basic infrastructures and amenities of a country like: education, good roads, sewage system and electricity etc. Many governments also impose taxes to encourage economic activities and regulate them. A closed economy is one that does not allow its people to trade in the international market. With the help of policies and governance, a closed economy can achieve self-sufficiency. A closed economy can be found in countries that want to cut themselves off from the outside world.