With respect to GDP, how are welfare payments treated?
A) They are included in GDP because they represent payment for work performed in the past.
B) They are included in GDP because they represent potential consumption.
C) They are excluded from GDP because they do not represent current government purchases of goods and services.
D) They are excluded from GDP because they are not private pensions.

Question

Quizplus · Accepted Answer

Welfare payments are transfer payments made by the government and do not represent current production of goods and services. As such, they are not included in GDP as they do not reflect economic activity.

With Respect to GDP, How Are Welfare Payments Treated