What is the underground economy? How does it affect GDP calculations? Provide three examples of underground economy transactions
The underground economy includes both legal and illegal activities. Payments for services in the underground economy are not reported to governmental authorities. As a result, GDP calculations underestimate the level of productive activity in the economy. Examples will vary, but may include illegal gambling, prostitution, and drug transactions.
You might also like to view...
Which of the following statements is TRUE?
A) There is a direct relationship between investment and the interest rate. B) There is an inverse relationship between investment and the interest rate. C) Investment is always less than savings. D) There is no relationship between investment and the interest rate.
For a perfectly competitive firm, marginal revenue is identical to marginal cost at every quantity
a. True b. False
With reference to the operations of the ABB Group discuss the functioning of matrix form organizations
In a certain city, the local government regulates the destruction of historic buildings and provides tax breaks to owners of historic buildings who restore them. These government policies
a. reflect the fact that restored historic buildings convey a positive externality. b. reflect the fact that the destruction of historic buildings conveys a positive externality. c. are likely to worsen the market failure that is associated with historic buildings and the restoration of such buildings. d. are likely to decrease the well-being of society as a whole.