Question

__________________ sectors of the economy are transactions that arise outside the

legitimate sector of a country's economy.
a. Gray and black
b. Gray and white
c. Gray and blue
d. Gray and green
e. Gray and yellow

Answer 1

The gray and black sectors are parts of the economy that involve legitimate goods sold through unauthorized means or illegal economic activities, respectively. These contrast with the recognized primary, secondary, tertiary, and quaternary sectors, of which the service sector is a significant contributor to economic growth.

Step-by-step explanation:

The sectors of the economy where transactions arise outside the legitimate sector are known as the gray and black sectors. The gray market deals with the sale of legal goods through unauthorized channels, while the black market involves illegal economic activities such as the trade of drugs, firearms, or human trafficking. It's important to differentiate these from legitimate economic activities, typically categorized into primary (raw materials), secondary (manufacturing), tertiary (services), and quaternary (information services) sectors. The service sector, encompassing tertiary and quaternary activities, is critical for economic growth, especially as it relates to non-physical transactions and sectors, which are increasingly becoming dominant in countries like the United States.

Furthermore, the work of economists like Sir W. Arthur Lewis on the dual sector economy helps explain transitional labor trends from agriculture to manufacturing and the role of surplus workers in economic development.