Question

1- Think about our economy. Irrespective of economic conditions, we consume many goods and services in various quantities. There are constant allocation and re-allocation of resources. How does this happen? What economic mechanism helps allocate resources to the preferences of hundreds of millions of people? (Hint: Consumer's sovereignty).

2-In light of the underground economy, and other shortcomings of using GDP as a measuring rod, do you think the government should include estimates of the underground economy in its GDP calculations? Discuss the pros and cons. Use references as needed.