GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

Question

Quizplus · Accepted Answer

The underground economy, also known as shadow or informal economy, consists of economic activities that are not reported to the government and therefore not included in official GDP measurements. This can include activities such as bartering, informal goods and services, and illegal activities, among others. As a result, GDP tends to underestimate the true level of economic activity in the economy.

GDP Tends to Underestimate the Productive Activity in the Economy