Which of the following transactions would take place in the "underground economy"?
A)Elizabeth tells her mother she's going to work but really goes to see a movie.
B)Paul buys 15 gallons of gasoline for $3.29 a gallon,not realizing that $1.50 per gallon of that price goes to the government as tax revenue.
C)John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes.
D)Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it.

Question

Quizplus · Accepted Answer

Making and selling goods without reporting them for tax purposes is a common practice in the underground economy. John's decision to sell his products at a flea market for cash to avoid paying taxes falls under the underground economy.

Option A is not a transaction as it involves an individual lying to their mother, not an economic transaction.

Option B involves a consumer purchasing a product at a market rate, and the government receiving revenue in the form of taxes, and is a legitimate transaction.

Option D involves a person buying and subsequently selling a product through a legitimate platform, and is not considered an underground economy transaction.

Which of the Following Transactions Would Take Place in the "Underground