A closed economy has market clearance equations built over several decades.Domestically, the economy acquired wealth over the years. The policy makers looked atthe domestic markets and found that product markets are almost perfect and that technicalrate of substitution has been advantageous. The economic fundamentals were strongenough to open up the economy. There was opposition attributing to inconsistency from“outside” The debate were on the following questions.1) What are the macro economic fundamentals?2) Could market equations remain the same after “opening up” of the economy?3) What if the economy is closed for some more time?
