With Respect to GDP, How Are Transfer Payments Treated

question 160

Multiple Choice

With respect to GDP, how are transfer payments treated?

• A) They are included in GDP because they represent income to individuals.
• B) They are not included in GDP because they are not payments for currently produced goods or services.
• C) They are included in GDP because the income will be spent for consumption.
• D) They are not included in GDP because taxes will have to be raised to pay for them.

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Definitions:

Recessions

Periods of temporary economic decline during which trade and industrial activities are reduced, generally identified by a fall in GDP in successive quarters.

Macroeconomics

The branch of economics that is concerned with the overall ups and downs in the economy.

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Services Society

A society where the economy is significantly driven by the provision of services rather than the production of goods.