In the National Spending Approach for calculating GDP, government purchases include which of the following government outlays? I. the payment of Social Security benefits II. the allowance of Earned Income Tax Credits III. purchase of a new automobile by the state department
A) I only
B) I, II, and III
C) II only
D) III only

Question

Quizplus · Accepted Answer

The National Spending Approach includes only purchases of newly produced goods and services by the government. Social Security benefits and Earned Income Tax Credits are transfer payments, which are not included in government purchases. Only the purchase of a new automobile by the state department would be considered in government purchases, thus the correct answer is option D.

In the National Spending Approach for Calculating GDP, Government Purchases