What is a black economy?

The black economy can be classified into the informal economy, the unreported economy, the illegal economy, and unrecorded economy.
Black economy can be called as black marketing in which unlawful trade happens between parties on products which are not allowed by the government to sell in the market.
This happens when government has placed certain restrictions on some products. This income which is generated through these unlawful means is not avveoy in calculating the national economy of the country. These transactions have also no place while measuring the GDP of a country.

  • The black economy is all economic activity in a given economy that occurs outside or in violation of the prevailing laws and regulations of society.

  • People will break or ignore the rules imposed when governments intervene, tax, or regulate markets. This can produce net economic benefits or costs to society.

  • Activity in the black economy is often illegal, usually untaxed, and rarely recorded by official economic statistics. In fact, the activity may not consist of formal market transactions at all, making it very difficult to estimate.