Question

Unemployment compensation is a. not part of GDP because it is a transfer payment. b. part of GDP because the recipients must have worked in the past to qualify. c. not part of GDP because the payments reduce business profits. d. part of GDP because it represents income.

Answer 1

Answer:

a. not part of GDP because it is a transfer payment.

Explanation:

Unemployment compensation includes the funds given to a worker who is currently without a job but actively seeking one. Usually, it is funded from the taxes given to the state by employers.

GDP is the measure (in terms of money) of all goods made or services given in a time period (usually a year) in a particular country. Since the unemployment compensation does not reflect any produced goods or services, it is a transfer payment. Thus, it is not included in the GDP.