Why Are Transfer Payments Not Counted as Part of GDP

question 94

Multiple Choice

Why are transfer payments not counted as part of GDP?

• A) Transfer payments do not involve the purchase of a final good or service.
• B) Transfer payments are not spent within the United States.
• C) Spending by the unemployed and senior citizens is not included in GDP.
• D) Transfer payments are not counted because they must ultimately be paid back.

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Definitions:

Sarbanes-Oxley

A U.S. law enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Public Confidence

is the trust and belief the general public holds in the stability and integrity of institutions, markets, and systems.

Petty Cash Fund

A small amount of cash kept on hand to pay for minor, incidental expenses.

Relatively Large Amounts

Describes financial figures or transactions that are significant in size compared to others within the same context.