Transfer Payments Are Excluded from the Government Component in the Calculation

question 65

Multiple Choice

Transfer payments are excluded from the government component in the calculation of GDP because

• A)they do not represent the purchase of a good or a service.
• B)they are not counted as income by any economic agent.
• C)they do not generate additional income in the economy.
• D)it is difficult to assess the market value of a transfer payment.
• E)they are small enough to ignore when computing the national accounts.

---

Definitions:

Incidental Damages

Incidental damages are additional costs incurred by one party due to the failure of another party to fulfill a contract, including efforts to mitigate losses or cover breach-related expenses.

Breach Contracts

Actions or failures to act that violate the terms of a legally binding agreement, leading to legal consequences for the breaching party.

Intent

A person's plan or purpose to carry out a specific action, often regarded as a crucial element in determining the legal ramifications of that action.

Obsolete

Refers to something that is out-of-date or no longer in use, typically because it has been superseded by newer, more efficient alternatives.