Question

As poor economies grow, the share of production that passes through formal markets rises as subsistence farmers become more integrated into markets and improved law enforcement reduces black market activity. Would this process tend to raise or lower the measured rate of economic growth? Would the measured rate of economic growth tend to understate or overstate the true rate of economic growth? What is a possible solution?

Answer 1

Poor economics grow to the share of production that passes through foreign markets Rises as subsistence farmers become more integrated into markets it means it is a common policy when any economy grows in any country then there is a managed and organised market for the products this is only reason that all the farmers should follow a proper line of organised way of reducing and managing the produced goods in this case the rise of black market it's not possible and it may reduces the possibility of rising the black marketing in the economy somehow it is a concept related to parallel economy and if the parallel economy reduces then the growth rate of any economy will go down this is a possibility because maximum legal restrictions and legal enforcement will reduces the possibility of making the things grow in some another way so the positive solution of these that government should allow some liberty and liberal policies and ideas to make the economy more positive and growing and it is in the favour of farmers and other stakeholders of the economy the complete production and the complete productive activities are more important to grow in the economy.