Legalizing All Forms of Illegal Activities

question 37

Multiple Choice

Legalizing all forms of illegal activities

• A)reduces GDP and reduces the size of the underground economy.
• B)reduces GDP and increases the size of the underground economy.
• C)increases GDP and reduces the size of the underground economy.
• D)increases GDP and increases the size of the underground economy.

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Definitions:

Recession

A noticeable drop in economic activity that affects the entire economy, enduring beyond several months, usually evidenced in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Transfer Payments

Payments made by the government to individuals, without the government receiving any goods or services in return.

Nondiscretionary Fiscal Policy

involves government policies, like taxation and certain types of government spending, that are not easily altered and automatically adjust to economic conditions.

Aggregate Demand

The whole of economic demand for goods and services at a given price level, within a certain time range.