Each of the following drive a wedge between GDP and consumption spending except
A) depreciation: goods produced that merely replaces obsolete and worn-out capital.
B) the tax system.
C) government transfer payments.
D) private savings.

Question

Quizplus · Accepted Answer

Government transfer payments, such as social security or unemployment benefits, directly increase the income of consumers, which can be used for consumption. Unlike the other options, they do not create a gap between GDP and consumption spending but can actually bridge it by providing more funds for consumption.

Each of the Following Drive a Wedge Between GDP and Consumption