What is the term for economic activities that are not recorded or taxed by the government?

The correct term for economic activities that are not recorded or taxed by the government is the underground economy. This refers to a segment of economic activity that goes unreported to authorities, typically to avoid taxation or regulation. Such activities can include informal employment, unregistered business operations, and transactions conducted in cash to evade detection.

The underground economy can have significant implications for government revenue, as tax authorities are unable to collect taxes on these unreported earnings, leading to potential deficits and affecting the overall economic statistics. Understanding this concept helps in analyzing the broader economic environment and the impact of regulations on business operations and labor markets.

In contrast, fiscal policy pertains to government spending and taxation decisions made to influence the economy, while labor productivity measures the efficiency of labor in producing goods and services. Durable goods are items intended to last for an extended period, which relate to consumer behavior but do not encompass unreported economic activities.