Because of activity in the underground economy,
A)GDP statistics understate the true volume of economic activity
B)GDP statistics overstate the true prices in the economy
C)consumers are not as well off as GDP statistics indicate
D)firms' profits are higher than GDP statistics indicate
E)government revenue is higher than GDP statistics indicate

Question

Quizplus · Accepted Answer

The underground economy, consisting of activities that are not reported to authorities for tax, regulatory or other reasons, is not captured in the official GDP statistics. As a result, the measured GDP may understate the true volume of economic activity in the country.

Because of Activity in the Underground Economy