Which of the following government outlays is a transfer payment that would NOT be included in GDP?
A) The Veteran's Administration pays a doctor to care for a wounded veteran.
B) The National Security Agency builds a new building for its headquarters.
C) The Social Security program sends a monthly payment to a senior citizen.
D) The Defense Department buys a new aircraft carrier.

Question

Quizplus · Accepted Answer

Transfer payments, such as Social Security payments to senior citizens, are not included in GDP because they do not represent payments for goods or services produced. Option A would be included in GDP because it is a payment for medical services (a good). Option B would be included because it is an investment in infrastructure (a good). Option D would be included because it is a purchase of a final good (the aircraft carrier).

Which of the Following Government Outlays Is a Transfer Payment