Why are transfer payments not counted as part of GDP?
A) Transfer payments do not involve the purchase of a final good or service.
B) Transfer payments are not spent within the United States.
C) Spending by the unemployed and senior citizens is not included in GDP.
D) Transfer payments are not counted because they must ultimately be paid back.

Question

Quizplus · Accepted Answer

Transfer payments involve payments made by the government to individuals or businesses without the exchange of a good or service. They are not included in GDP because they do not represent the production of goods or services within an economy.

Why Are Transfer Payments Not Counted as Part of GDP