Gross domestic product understates the total production of final goods and services because of the omission of

Question

Quizplus · Accepted Answer

The underground economy, which consists of unreported and illegal economic activities, is not included in the calculation of GDP. This includes activities such as drug trafficking, prostitution, and illegal gambling. Because these activities are not reported to the government, they are not included in official GDP statistics, leading to an understatement of total production.

Gross Domestic Product Understates the Total Production of Final Goods