Legalizing all forms of illegal activities

QUESTION

Legalizing all forms of illegal activities

1. reduces GDP and the size of the underground economy.
2. increases GDP and increases the size of the underground economy.
3. reduces GDP and increases the size of the underground economy.
4. increases GDP and reduces the size of the underground economy.

ANSWER

The correct option is 4. increases GDP and reduces the size of the underground economy.