Which of the following best describes the treatment of illegal economic activities in national income accounting?

medium Q7 of 15

Economic Awareness - Sectors of Indian Economy

AThey are fully included as they contribute to economic output

BThey are partially included if reported

CThey are completely excluded due to lack of official records

DThey are included only if taxed

Step-by-Step Solution

Step 1: Understand treatment of illegal activities
Illegal economic activities are not officially recorded and thus excluded from national income data.
Step 2: Analyze options
They are not included fully or partially unless reported, and taxation is irrelevant as they are unreported.
Final Answer:
They are completely excluded due to lack of official records → Option C
Quick Check:
They are completely excluded due to lack of official records = correct ✅

Quick Trick: Illegal activities are outside official GDP calculations.

Common Mistakes:

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