The underground economy involves illegal trading of goods through legal or illegal channels in order to procure banned items or evade taxes and price controls. Examples include drugs, weapons, and other illicit goods. Operators of underground economies disguise illegal businesses as legal fronts to avoid detection by authorities. Globally, the underground economy was valued at $1.8 trillion in 2014.

1. Explain the concept of an underground economy
Solution
The Underground economy, also known as the black economy is an economy in which goods are
traded illegally. The goods as well as transactions are illegal and can be done through legal or
illegal channels. The main reason for the existence of such economies is either to procure illegal
items (banned by government) or to evade taxes or price controls.
Examples of goods traded in such economies are:
People running such illegal businesses often cover it on the front end as any legal business, in
order to escape the eyes of the law.
As of 2014, the value of the total global black market stands at $1829 billion.