A distinguishing characteristic of public transfer payments is that:
A)they are used to subsidize the major transportation carriers to reduce transportation costs.
B)they are counted as part of government purchases in the calculation of the gross domestic product.
C)there is a tax on the amount of the subsidy above a certain income level.
D)the recipients make no contribution to current production in return for them.

Question

Quizplus · Accepted Answer

Public transfer payments are payments made by the government to individuals or families for which no current production is required in return. These payments are usually meant to provide assistance or support to those who are unable to provide for themselves, such as those who are unemployed, disabled, or elderly. Examples of public transfer payments include Social Security, unemployment benefits, and welfare. Unlike government purchases, which involve the acquisition of goods and services for public use, transfer payments do not directly contribute to the production of goods and services in the economy. Therefore, Choice D is the best answer. Choices A, B, and C are incorrect because they do not accurately describe the characteristics of public transfer payments.

A Distinguishing Characteristic of Public Transfer Payments Is That