GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:
A)public transfer payments to households.
B)the consumption of fixed capital.
C)intermediate goods.
D)the underground economy.

Question

Quizplus · Accepted Answer

GDP does not account for the value of output produced in the underground economy, which includes illegal activities and unreported income. This can result in an underestimation of the actual productive activity in the economy.

GDP Tends to Underestimate the Productive Activity in the Economy