Economics Gdp Questions
The underground economy refers to economic activities that are not recorded or regulated by the government. It includes illegal activities such as drug trafficking, prostitution, and smuggling, as well as legal activities that are intentionally concealed to avoid taxes or regulations.
The underground economy has a significant impact on GDP because it is not included in official economic measurements. Since these activities are not reported, they are not accounted for in the calculation of GDP. As a result, the size of the underground economy can distort the accuracy of GDP figures, leading to an underestimation of the true economic output of a country. Additionally, the underground economy can also lead to a loss of tax revenue for the government, affecting public finances and economic policies.