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Econ 1-32 Underground Economy

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Econ 1-32 Underground Economy

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E.4.1 Explain how markets underproduce public goods, and analyze the role of government to resolve those market failures.
E.4.2 Describe how the government taxes negative externalities (spillovers) and subsidizes positive externalities to resolve the inefficiencies they cause.
E.4.3 Describe the major revenue and expenditure categories in state and federal budgets and their respective proportions, and the challenges of achieving a balanced budget. (E)
E.4.4 Determine whether different types of taxes (e.g., income tax, sales tax, and Federal Income Contributions Act [FICA] tax including Social Security and Medicare) are progressive, proportional, or regressive. (E)
GE.7.1 Define and explain fiscal policy and its tools. (E)
GE.7.2 Define and explain monetary policy and its tools. (E)
GE.7.3 Analyze how the government uses fiscal policy to promote price stability, full employment, and economic growth.
GE.7.4 Explain how the use of fiscal policy affects budget deficits or surpluses and the national debt.
GE.7.5 Analyze how the Federal Reserve uses monetary policy to promote price stability, full employment, and economic growth. (E)

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Lance Hiles
Lance Hiles
United States

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Econ 1-32 Underground EconomyVersion en ligne

E.4.1 Explain how markets underproduce public goods, and analyze the role of government to resolve those market failures. E.4.2 Describe how the government taxes negative externalities (spillovers) and subsidizes positive externalities to resolve the inefficiencies they cause. E.4.3 Describe the major revenue and expenditure categories in state and federal budgets and their respective proportions, and the challenges of achieving a balanced budget. (E) E.4.4 Determine whether different types of taxes (e.g., income tax, sales tax, and Federal Income Contributions Act [FICA] tax including Social Security and Medicare) are progressive, proportional, or regressive. (E) GE.7.1 Define and explain fiscal policy and its tools. (E) GE.7.2 Define and explain monetary policy and its tools. (E) GE.7.3 Analyze how the government uses fiscal policy to promote price stability, full employment, and economic growth. GE.7.4 Explain how the use of fiscal policy affects budget deficits or surpluses and the national debt. GE.7.5 Analyze how the Federal Reserve uses monetary policy to promote price stability, full employment, and economic growth. (E)

par Lance Hiles
1

United Nations says organized crime earns $879 billion a year, 1.5% of global Gross Domestic Product. Drug trafficking $320 billion. Counterfeiting $250 billion. There's also billions made from ____ ____ , smuggling people across borders.

  
  
2

When citizens leave the official economy & enter the informal economy, they stop paying taxes, & the IRS might need to ____ ____ on those still in the official economy, which continues the cycle by forcing more citizens into the informal economy.

  
  
3

The underground economy makes us think about illegal stuff: dealing drugs, selling kidneys. But for economists, the informal economy is all trade & work that happens off the books, under the table, outside of the sight and reach of ____ ____ .

  
  
4

When citizens leave the official economy & enter the informal economy, they stop paying taxes, & the government might need to cutback on ____ ____ nets. (welfare programs)

  
  
5

After the ____ ____ of 2008, the underground economy doubled. Citizens were laid off & picked up odd jobs to piece together a living. The underground economy can serve as a temporary buffer for individuals.

  
  
6

Some activities in the underground economy are illegal, but a lot are mundane: mom cutting hair without state license, guy selling fruit along road, housekeeper getting paid off books, you when you ____, or sold lemonade on the corner.

  
  
7

Why the underground market is bad: politicians might pass ineffective policies, hurting society, because they lack real data on _____ and ____ .

  
  
8

It is difficult to ____ the underground economy. It is difficult to get people who fly under the radar to answer survey questions about wages. "Small child, could you give me estimates on lemonade sales? Hours worked? Supply costs?"

9

Why the underground economy is bad: Without government protections, workers in the informal economy might be mistreated by owners. No minimum wage, dangerous conditions, none of the ____ ____ that the government requires.

  
  
10

It is difficult to measure the underground economy: People who evade taxes, smuggle animals, & deal cocaine are not going to be ____ about their income.

11

Why the underground economy is bad: You might think it's okay for people engaged in "legal jobs" to work under the table, but the ____ ____ organization says workers in the informal economy don't have adequate safety nets to protect them.

  
  
12

We use indirect, macro-economic ways to estimate the underground economy. One method subtracts ____ & ____ . When there's no underground economy, the two are equal, but when people spend more than they make, the difference is the informal economy.

  
  
13

The problem with legalizing the kidney market: In the middle east, it's legal to sell kidneys in some countries, & sellers are usually ____ . This is unethical because it forces [same] people to sell kidneys to feed their children.

14

We use indirect, macro-economic ways to estimate the underground economy. One method tracks the ____ for ____ . People selling on the corner usually accept paper money only, no debit card or check.

  
  
15

The benefits of legalizing the kidney market: market will exist anyway, so its best to let the government protect seller & buyer. Also, the sale of kidneys would increase supply & stop people from ____ .

16

We use indirect, macro-economic ways to estimate the underground economy. One method tracks ____ use, which is a valid indicator of economic activity. Everyone needs energy, so if [same] use is high, & GDP is low, underground economy is doing well.

17

Why the underground economy is bad: Since illegal markets are illegal (criminal), they are often ____ . Kidney sellers may get less money than agreed upon, or they get infected after surgery. Kidney buyers can get a diseased kidney.

18

How big is the informal economy: Trillions of dollars globally. It is less active in ____ countries (10% to 20% of GDP). In ____ countries, it accounts for more than 33% of economic output.

  
  
19

Why the underground economy is bad: it allows people to damage the ____ . Cutting down all the oxygen producing trees. Animals go extinct so we can sell their skin & bones.

20

The underground economy is also know as the shadow economy, the ____ ____ , the black market, the unofficial economy, the hidden economy. Either way, it's off the books & under the table.

  
  
 
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