Transfer payments are payments made by the government that are not made to purchase a good or service. Examples include social security, welfare, and unemployment benefits. They are not included in the government expenditure category in gross domestic product, as they do not represent spending on goods or services.

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Transfer Payments

Question 106

Multiple Choice

Transfer payments

A) refer to all payments made to households by governments.
B) are made by households to firms in exchange for goods and services.
C) refer to payments made by the government that are not made to purchase a good or service.
D) are included in the government expenditure category in gross domestic product.

Correct Answer: