The study begins with a critical analysis of the various methods currently used for measuring the size of the underground economy. Macroeconomic measures include total currency in circulation, total demand deposits, and total transactions in the economy. Microeconomic measures are used to evaluate the underground economy by observing taxpayers' actual behavior in the economy, by the spending of households for illegal goods and services, by the activities of informal suppliers, and by sector-by-sector analysis. The various sectors of the underground economy which are considered here include drugs; illegal gambling; prostitution; illegal abortion; child pornography; audio, video, and software piracy; and cigarette smuggling, loan sharking, bartering, and skimming. The economic consequences of the underground economy include tax evasion, economic inefficiency, and resource shifts.