Transfer payments,such as unemployment insurance and welfare,are included in the circular flow as part of
A) government purchases
B) household saving
C) net taxes
D) planned investment spending
E) household consumption

Question

Quizplus · Accepted Answer

Transfer payments are made by the government to households without any goods or services being exchanged, and they are not considered a part of government purchases or investment spending. Transfer payments are subtracted from gross income to determine disposable income, which is then used for consumption, saving, or paying taxes. Therefore, transfer payments are included in the circular flow as part of net taxes.

Transfer Payments,such as Unemployment Insurance and Welfare,are Included in the Circular