Question

Legalizing all forms of illegal activities would ___________.

A) increase the size of the underground economy and reduce measured GDP.
B) reduce the size of the underground economy and increase measured GDP.
C) reduce measured GDP.
D) reduce both the underground economy and measured GDP.

Answer 1

Answer: B) reduce the size of the underground economy and increase measured GDP.

Explanation: We all know that the GDP is a measure of a countries measures the total value of the goods and services produced within a country over a period (year). This is a country's main measure of it's economic output, and it usually includes things like clothing, food and housing e.t.c.

The GDP is only made are legal things. But, if the wares of drug dealers, pimps, bookies and other black-market organisations were to included, the GDP would increase by more than 1%