Question

This type of economy plays a major role in many countries. People evade taxes and regulations by working or by employing people illegally. On the one hand, this unregulated economic activity can result in reduced tax revenue and public goods and services, lower tax morale and less tax compliance, higher control costs, and lower economic growth rates. But on the other hand, this type of economy can be a powerful force for advancing institutional change and can boost the overall production of goods and services in the economy. What economy can be described like this?

Answer 1

Ответ:

The type of economy described in your statement is often referred to as the "informal economy" or the "shadow economy." The informal economy consists of economic activities that are not regulated by the government, often involving cash transactions and lacking proper documentation. This can include activities such as off-the-books work, unregistered businesses, and under-the-table employment.

While the informal economy can contribute to tax evasion and regulatory challenges, as mentioned in your statement, it also plays a role in providing employment opportunities and contributing to overall economic output. Additionally, it can serve as a driving force for institutional change, especially in regions where formal economic structures may be inadequate or burdensome.

In summary, the informal economy is characterized by its lack of regulation and formal oversight, leading to both positive and negative implications for government revenue, public services, and economic growth.

Объяснение: