Government Spending on Transfer Payments Is Included in Government Purchases

question 125

True/False

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

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Definitions:

Tax Rate

The percentage of one's income or the value of a good, service, or asset that is paid as tax to the government.

Market Value

The existing cost at which a service or asset is available for purchase or sale in the market.

Sales Tax

A tax imposed by government on sales of goods and services, typically computed as a percentage of the sale price.

Delivery Charge

A fee charged by a seller to cover the cost of delivering goods to a buyer's location.