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| Category | Value |
| Net exports | $50 |
| Value of new goods and services produced in the underground economy | 75 |
| Personal consumption expenditures | 300 |
| Value of the services of stay-at-home parents | 25 |
| Gross domestic investment | 100 |
| Government purchases | 50 |
| Total | 600 |
Instructions: Enter your answers as whole numbers. C
a. What is Upper Mongoose’s GDP for the year?
? billion
b. What is the size of the underground economy as a percentage of GDP?
Instructions: Enter your answers as whole numbers.
a. What is Upper Mongoose’s GDP for the year?
? billion
b. What is the size of the underground economy as a percentage of GDP?
? percent
c. By what percentage would GDP be boosted if the value of the services of stay-at-home spouses were included in GDP?
? percent
♦ Relevant knowledge
Underground economy can also be called the black market. It refers to the activities of a business in a nation that aren’t recorded, taxed or regulated through the federal government. Transactions on markets that are black considered as unlawful since the trade is not in accordance with the legal procedure for trading laid down.
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Answer:
The GDP does not include the income from underground activities or personal services provided to households.
The GDP of the upper Mongoose can be calculated as follows:
Net exports + Consumption expenditure + Investment + Purchases
GDP = 50 + 300 + 100 +50
GDP = 500 billion
(b) Subgound economy = 75 billion
Percentage of underground economy = (75/500) x 100 = 15%
(c) If you include the “Stay at-services”,
New GDP = 500 + 25 = $525 Billion
25 billion USD GDP Increase
Percentage of GDP growth = (25/500) x 100 = 5%.