A "closed economy" is an economy in which:

A closed economy is one that has no trade with the rest of the world. Neither goods nor services flow out (exports) or in (imports), so option D is correct. Domestic output is absorbed entirely at home, and the national income identity reduces to C + I + G, with no (X - M) term. The opposite is an open economy, where external trade takes place.

• A is wrong. Controlling the money supply is a monetary policy choice that both open and closed economies can make. It does not define the type of economy.
• B is wrong. Deficit financing is a fiscal tool, where the government covers a gap through borrowing or money creation. Open economies, India included, use it routinely.
• C is wrong. An economy that exports but does not import is still engaged in international trade, so it cannot be closed. Trade in one direction is still trade.

The concept links to the balance of payments and the open-economy macro model in Economics and Indian Economy. For Mains, the 1991 reforms and the shift from a relatively closed to a more open economy, along with its gains and vulnerabilities, is a natural extension.

Trap: aspirants pick A or B because they sound like economic terms, but the definition depends entirely on international transactions, not on domestic policy tools.