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)the underground economy.
D)intermediate goods.

Question

Quizplus · Accepted Answer

GDP does not account for the underground economy, which includes unreported income from informal or illegal activities, thus underestimating the total productive activity.

GDP Tends to Underestimate the Productive Activity in the Economy