Final answer:
Government purchases are always included in GDP, as they are expenses for goods or services produced in the economy. Transfer payments such as social security are not counted as part of GDP. Therefore correct option is A
Step-by-step explanation:
The question relates to components of GDP and which government expenditures are included in the calculation of Gross Domestic Product (GDP). Among the options presented, government purchases of goods and services are always considered part of GDP. These purchases refer to spending on goods and services produced within the economy by all levels of government, such as federal, state, and local. Examples include investments in infrastructure like new highways and schools.
On the other hand, transfer payments like government social security are not included in GDP as they are income transfers and do not constitute purchases of new goods or services.
It is important to note that, while government expenditures are a component of GDP, not all government spending counts towards GDP. Only those which result in the receipt of new goods or services, reflecting actual production, are included.