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What problem occurs in measuring illegal activities in GDP?

Answer and explanation

Correct answer: Reliable data is not available

Illegal activities are generally hidden from official authorities, so transactions may not be reported and reliable records are difficult to obtain. Since GDP estimation depends on production, income, or expenditure data, missing information can lead to undermeasurement. This is a measurement limitation rather than proof that the activity has no economic value; therefore, option A is correct.

Related tags

EconomicsGdp MeasurementIllegal ActivitiesData LimitationNational IncomeNational Income And Related AggregatesGdp And WelfareClass 11 Mcq

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