Transfer payments are included in the government budget deficit but not included in the government purchases component of GDP.

Question

Quizplus · Accepted Answer

Transfer payments, such as social security benefits and welfare payments, are payments made by the government to individuals or households without any goods or services being produced in return. They are considered as government spending and are included in the government budget deficit. However, because they do not involve the production of goods or services, they are not included in the government purchases component of GDP.

Transfer Payments Are Included in the Government Budget Deficit but Not