Transfer payments are:
A) payments made to firms for investment.
B) payments that do not require a good or service in exchange.
C) considered a part of government purchases.
D) an important component of GDP because they increase consumption spending.

Question

Quizplus · Accepted Answer

Transfer payments are payments that do not require a good or service in exchange. They are typically made from the government to individuals or households for social welfare programs such as Social Security or unemployment benefits. Transfer payments are not included in GDP calculations because they do not result in the production of goods or services exchanged in the market.

Transfer Payments Are