Black Economy

AAA

DEFINITION of 'Black Economy'

The segment of a country's economic activity that is derived from sources that fall outside of the country's rules and regulations regarding commerce. The activities can be either legal or illegal depending on what goods and/or services are involved.

INVESTOPEDIA EXPLAINS 'Black Economy'

For instance, a construction worker who is paid under the table will neither have taxes withheld, nor will the employer pay taxes on the his earnings. The construction work is legal; it is the nonpayment of taxes that classifies the event as part of the black economy. The illegal-weapons trade is an example of black-economy activity that is illegal.


Black markets are those goods and services that form the black (or underground) economy. Typically, black markets arise when a government restricts economic activity for particular goods and services, either by making the transaction illegal or by taxing the item so much that it becomes cost-prohibitive. A black market may arise to make illegal goods and services available or to make expensive items available for less money (such as pirated software).

RELATED TERMS
  1. Bitcoin

    A digital or virtual currency that uses peer-to-peer technology ...
  2. Black Market

    Economic activity that takes place outside government-sanctioned ...
  3. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) ...
  4. Linden Dollar

    A digital currency utilized in the virtual world Second Life. ...
  5. Knowledge Economy

    A system of consumption and production that is based on intellectual ...
  6. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
Related Articles
  1. How To Report A Tax Cheat
    Taxes

    How To Report A Tax Cheat

  2. Taking A Look At Tax Havens
    Taxes

    Taking A Look At Tax Havens

  3. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  4. How Fannie Mae And Freddie Mac Were ...
    Economics

    How Fannie Mae And Freddie Mac Were ...

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center