Tuesday, November 13, 2007

The government should eliminate the underground economy.

Drew, remember that we discussed the limitation of using GDP as a measure of a country's economic well-being. The textbook indicates that GDP does not capture several sources of output production in the economy. One of these sources is the underground economy. Now imagine you work for the Department of Justice and are asked to present a briefing on the advantages and disadvantages of increasing expenditures to reduce tax avoidance.

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