GDP includes the value of illegal transactions, which means the level of economic activity in a country is overstated.

Question

Quizplus · Accepted Answer

GDP only includes legal economic transactions that are recorded and reported to the government. Illegal activities such as drug trafficking or black market transactions are not included in GDP calculations. Therefore, the level of economic activity in a country may actually be understated if significant illegal activity is present.

GDP Includes the Value of Illegal Transactions, Which Means the Level