Question

What is an underground economy? What is the size of the underground economy in the United States? How does this affect US GDP? Explain in detail, and use data to explain the impact.

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Answer 1

The underground economy applies to commercial activities which are considered illegal, either because the exchanged goods or services are illegitimate in nature or because the activities do not meet with the standards of government reporting. The criminal economy in the United States is also called the shadow economy, the black market, or7 the illicit economy, which consists largely of street drug trafficking which illegal prostitution. Other manifestations of the shadow economy, though, remain as well

It was estimated that the American underground economy reached $1 trillion in 2009, accounting for about 8 percent of the U.S. gross domestic product ( GDP). Underground economic investment, however, had surpassed an estimated $ 2 trillion by 2013, largely due to the long-term effects of the 2008 financial crisis and the consequent recession of the mainstream economy. As of early 2020, the underground economy is expected to be 11 or 12 percent of the U.S. GDP, or a total of 2.5 trillion dollars or so.