Transfer payments refer to payments made by the government to individuals or other entities where no goods or services are received in return. Examples include social security benefits, unemployment benefits, and welfare payments. These payments are not included in the calculation of GDP because they do not represent payment for the production of goods or services.

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Transfer Payments

Question 115

Multiple Choice

Transfer payments

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

Correct Answer: