Shadow Economy
Definition
The shadow economy refers to economic activities that occur outside the official system, often involving unreported income and transactions. It includes both legal activities (e.g., babysitting for cash) and illegal ones (e.g., drug trafficking).
Related terms
Informal Sector: Similar to the shadow economy, it consists of economic activities that are not regulated by formal institutions but may still be legal.
Tax Evasion: The illegal act of intentionally avoiding paying taxes owed to the government.
Underground Economy: Another term used interchangeably with shadow economy, referring to economic activities that go unreported for various reasons.
"Shadow Economy" appears in:
Study guides (1)
AP Macroeconomics - 2.2 Limitations of GDP
Practice Questions (1)
What does the shadow economy refer to?
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About Us
About Fiveable
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Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.