Question

With respect to GDP, how are transfer payments treated? Select one: :.00 O They are included in GDP because they represent income to individuals They are not included in GDP because taxes will have to be raised to pay for them O They are not included in GDP because they are not payments for currently produced goods or s ion They are included in GDP because the income will be spent for consumption. ous page ce Desk Support: 613-520-3700 or Do 4

Answer 1

(c) is correct They are not included in GDP because they are not payments for currently produced goods or services from cliffnotes.com Government expenditures: government expenditures on consumption and investment good and service are treated as a separate category in the expenditure approach to GDP example of government expenditures includes the hiring of civil servants and military personnel and the construction of road and public buildings social security welfare and other transfer payments are not included in government expenditures Recipients of transfer payment do not provide any current goods or services in exchange for these payments do not involve the purchase of any new goods or services and are therefore excluded from the calculation of government expenditures