PLEASE GIVE YOUR FEEDBACK OR POINT OF VIEW ON THE TOPIC ON THE QUESTIONS ANSWERE

Question

PLEASE GIVE YOUR FEEDBACK OR POINT OF VIEW ON THE TOPIC ON THE QUESTIONS ANSWERED BELOW:

1. What does the term ‘shadow economy’ mean? -The shadow economy is also referred to as an underground or illicit economy where people evade taxes or engage in black market transactions.

2. How does the shadow economy affect GDP in different countries? - The shadow economy causes GDP to increase significantly in other countries compared to that of the US. The US, for example holds a shadow economy of less than 10% of official GDP while European countries hold between 20% and 30% of official GDP.

3. What are the main factors influencing the shadow economy? -The main factors influencing the shadow economy are the rise in taxes and social security contributions and the rise in intensity of regulations to include trade barriers and license requirements. Additional contributors include weak enforcement of regulations and a widespread acceptance of the illicit work from the community which makes it difficult to end.

4. Why is the shadow economy a challenge for the governments? -The shadow economy is a challenge for governments because it is essentially a never ending viscous cycle. Heavy tax burdens result in a growth of the shadow economy, which in turn reduces government revenue and forces them to raise taxes even more.

5. Reflection One thing I learned from this assignment is that there are more people than we realize who either unintentionally or intentionally engage in illegal activity every day. Unfortunately, those people who choose to engage in and support the shadow economy are doing so because they feel it is their only ‘exit-option’ when they don’t agree with the government policies being presented to them. I learned that rather than engaging in the shadow economy and pushing the country into a vicious downward spiral, one could begin exercising the two-pillar strategy. The two-pillar strategy eliminates the use of the exit-option and strengthens the use of the ‘voice option’ for those looking to speak out within their community; the only way to promote change is to become an active and participating member in society.

Explanation / Answer

1.You can provide examples of shadow economy-income from self employment or barter.

2.If possible provide data for south America and Asian countries.

3.You can write these answers in points.It would give a more comprehensive view of the answer and give the reader more clarity.

5.The reflection is perfect and gives insight of your learning.No change is required for the fourth and fifth answer.

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