![]() Cash is the preferred medium of exchange in illegal transactions since cash transactions are less-easily traced. īecause tax evasion or participation in a black market activity is illegal, participants attempt to hide their behavior from the government or regulatory authority. Violations of the tax code involving income tax evasion constitute membership in the unreported economy. Examples include the illegal drug trade, prostitution (where prohibited), illegal currency transactions, and human trafficking. Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. If the rule defines the set of goods and services whose production and distribution is prohibited by law, non-compliance with the rule constitutes a black market trade since the transaction itself is illegal. A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. ![]()
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