Many Arab countries have a larger informal sector of the economy relative to developed countries. What effect would this have on the GDP of Arab countries?

Question

Quizplus · Accepted Answer

The informal sector often involves economic activities that are not recorded or taxed by the government, which means these activities are not included in the official GDP calculations. Therefore, the presence of a larger informal sector would lead to an understatement of the actual economic activity and thus the GDP of Arab countries.

Many Arab Countries Have a Larger Informal Sector of the Economy