The size of the underground economy is likely large when:
A) the cost of doing business legally is low.
B) bureaucratic red tape makes it difficult to legally start a new business.
C) taxes are low.
D) All of these are true.

Question

Quizplus · Accepted Answer

The size of the underground economy tends to increase when bureaucratic red tape and regulatory hurdles make it difficult to start and operate businesses legally. This is because high barriers to legal business operations encourage individuals and businesses to operate in the shadow or underground economy to avoid these obstacles.

The Size of the Underground Economy Is Likely Large When