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What problem may occur if data from the informal sector is limited in GDP?

Answer and explanation

Correct answer: GDP estimate may be low or incomplete

GDP is calculated from reported production and income data. A large informal sector often has incomplete records, unregistered activities, and limited surveys. If its output is missed or measured inaccurately, the recorded GDP may be lower than the actual level or may not fully represent economic activity. This is a measurement problem, not an automatic change in inflation or net indirect taxes.

Related tags

EconomicsGdpInformal SectorMeasurementGdp And WelfareNational Income And Related AggregatesClass 11 Mcq

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