What is the underground economy

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An article in the New York Times describes the much greater use of cash, as opposed to checks and credit cards, in buying and selling in China. The article describes someone bringing several bags of cash containing the equivalent of $130,000 into a car dealership to buy a new BMW. Another article notes: "Many economists believe that the rise in [use of] cash is strongly related to growth in the socalled underground economy."

a. What is the underground economy?

b. Why might buyers and sellers in the underground economy prefer to use cash?

Reference no: EM131023462

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