What term describes business transactions that are not included in a country's gross domestic product?

The term that describes business transactions not included in a country's gross domestic product is commonly known as the "Underground Economy." This term encompasses all economic activities that are not reported to the authorities and thus escape measurement by official agencies. These transactions typically involve cash payments and are often aimed at avoiding taxes or regulation.

The underground economy operates outside the formal structures of the economy, meaning it does not contribute to the official GDP calculations. It includes a range of activities, from unreported income from freelance work to illegal activities. Understanding this concept is essential as it sheds light on the limitations of GDP as an economic indicator, compelling economists and policymakers to consider unofficial sectors and income in their evaluations.

The other terms, while related, capture different aspects of economic activities. The formal economy refers to all legal businesses that are recognized and taxed by governmental authorities. The black market is more specifically associated with the trade of illegal goods and services. The shadow economy, while similar to the underground economy, often refers to unreported income that might not necessarily be illegal but is still not captured in official statistics.