Which of the Following Statements About the Underground Economy and How

question 90

Multiple Choice

Which of the following statements about the underground economy and how it relates to GDP is correct?

• A)Activity in the underground economy in Canada is estimated at over 25% of the value of GDP,which therefore significantly understates total output.
• B)Transactions in the underground economy are not legal,are not reported for tax purposes,and therefore not included in GDP.
• C)Transactions in the underground economy are legal but are not reported for tax purposes,and therefore not included in GDP.
• D)Activity in the underground economy is illegal and therefore should not be included in any measure of legitimate economic activity.
• E)Transactions in the underground economy are legal and therefore an estimate of their total value is included in GDP.

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Definitions:

Pensions and Savings Plans

Retirement benefit plans sponsored by employers to provide employees with financial security in their retirement years.

Legally Required Benefit

Employee benefits that employers are mandated to provide by law, such as social security, workers' compensation, and unemployment insurance.

Family Medical Leave

A policy allowing employees to take an extended leave of absence from work, for family or medical reasons, with the assurance of job security.

Workers Compensation

An insurance type that offers medical benefits and compensation for lost wages to workers injured while performing their job duties.