With respect to GDP, how is unemployment compensation treated?
A) It is included as part of GDP because it represents income.
B) It is not included as part of GDP because it is a transfer payment.
C) It is included as part of GDP because the recipients must have worked in the past to qualify.
D) It is not included as part of GDP because the payments reduce business profits.

Question

Quizplus · Accepted Answer

Unemployment compensation is a transfer payment, which means it is a payment made by the government that does not involve any exchange of goods and services. It is not considered a part of GDP because it does not represent income earned from productive activity.

With Respect to GDP, How Is Unemployment Compensation Treated