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.
Frequently asked questions
What is the correct answer to this question?
Reliable data is not available
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
