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Why can measuring illegal activity in GDP be difficult?

Answer and explanation

Correct answer: Reliable data is not available

Illegal activities may involve production or exchange, but they are deliberately hidden from official authorities. Participants generally do not report their transactions, and administrative records are incomplete or absent. Because national-income accounting requires reliable information about output and value, the lack of dependable data makes the contribution of illegal activity difficult to estimate accurately in GDP.

Related tags

EconomicsGdpMeasurement LimitationIllegal ActivityNational AccountingGdp And WelfareNational Income And Related AggregatesClass 11 Mcq

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