Suppose a government collects $12 billion in various tax revenues, and pays $2.5 billion in debt interest, $9 billion in social security benefits, and $0.5 billion in government employee wages. What is the direct contribution to GDP coming from this government's fiscal actions?

Question

Quizplus · Accepted Answer

The direct contribution to GDP from government fiscal actions is the government spending on goods and services, which in this case is the $0.5 billion in government employee wages. Other expenditures like debt interest and social security benefits are transfer payments and do not directly contribute to GDP.

Suppose a Government Collects $12 Billion in Various Tax Revenues