Transfer payments made by the government affect its net tax revenues
A)indirectly through the investment function.
B)indirectly through net exports.
C)directly.
D)indirectly through the consumption function.
E)indirectly through government purchases.

Question

Quizplus · Accepted Answer

Transfer payments made by the government directly affect its net tax revenues. Transfer payments are transfers of income from the government to individuals or other entities without any corresponding goods or services being received by the government in return. These payments include social security payments, unemployment benefits, and welfare payments, among others. The government's net tax revenues are the total amount of tax revenue collected minus any transfer payments made. Therefore, transfer payments directly affect net tax revenues.

Transfer Payments Made by the Government Affect Its Net Tax