The Underground Economy And Its Effects On Canada

While the underground economy might benefit individuals involved in the trades and make some part of the society happy, it is creating a bad cycle that brings negative third-party effects on Canada and should be eliminated as much as possible. Underground economy, also known as the black market, is when sellers and buyers trade their goods and services then on purposely unreported the business activity to evade the price controls. That includes avoiding the price ceilings, the price floors and tax rates set by the Government. The black market is the second largest type of market in the world, occurring in both developed and developing countries. All kinds of goods and services are available in an underground economy. The most commonly traded are goods and services that are available in the official market, but at a lower cost in the black market, or goods and services that have a limited supply in the official market, but are sold at an elevated price in the black market. Despite the trade being illegal, as long as both the seller and buyer comes to an agreement on the price, they trade privately with cash to avoid being detected. Although many sellers get away with this, at the end of the day underground economy is a continued cycle of affecting the country and its citizens, including sellers and buyers in the black market, mostly its tax revenues will be affected, then the GDP, and finally its citizens. All black market trades are done in the shadows, but if the rootShow MoreRelatedUnderground Economies And Its Effects On Canada1517 Words   |  7 Pageslooks into the different types of underground economies and its effects on Canada, and argues that underground economy is destructive to the society and should be eliminated as much as possible. With evidence from Statistics Canada, it shows the percentage of how much the black market is affecting the GDP. 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