Why are government expenditures such as Old Age Security payments,employment insurance payments,or welfare benefits paid to individuals not considered part of G,the government component of aggregate expenditure?
A)These are transfer payments and place no direct demand on Canada's total output.
B)These payments are directly included as part of C,consumption,because they become consumption expenditure for the recipient.
C)Since the revenues from which these payments are made did not originate from tax collection,they are not considered part of G.
D)Since these expenditures are transfers from recipients to taxpayers,they are not included in G.
E)These payments are included in G only when the payments are made directly by the federal government.

Question

Quizplus · Accepted Answer

Government expenditures such as Old Age Security payments, employment insurance payments, or welfare benefits paid to individuals are considered transfer payments. Transfer payments do not directly demand goods and services from firms or place any direct demand on Canada's total output. Therefore, they are not considered part of G, the government component of aggregate expenditure, which refers to government purchases of goods and services that directly demand goods and services from firms.

Why Are Government Expenditures Such as Old Age Security Payments,employment