Question

Transfer payments are not included in GDP calculations because ___________.

A. transfer payments do not include movements of income between countries so they should only be included in foreign country GOPs
B. transfer payments come from taxes and government expenditures so they are already included in government purchases
C. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service
D. None of the above because transfer payments are included in GDP.

Answer 1

Transfer payments are not included in GDP calculations because they are simply transfers of income from one group to another and not a purchase of a new good or service.

Step-by-step explanation:

Transfer payments are not included in GDP calculations because they are simply transfers of income from one group to another and not a purchase of a new good or service. GDP, or Gross Domestic Product, measures the total value of all final goods and services produced within a country's borders during a specific period of time. Transfer payments, such as government payments to individuals like welfare or unemployment compensation, do not represent production and therefore do not contribute to GDP calculations.