Question

Transfer payments are Multiple Choice excluded when calculating GDP because they do not reflect current production. included when calculating GDP because they increase the spending of recipients. included when calculating GDP because they are a category of investment spending. excluded when calculating GDP because they only reflect inflation.

Answer 1

Answer:

Excluded when calculating GDP because they do not reflect current production.

Explanation:

Transfer payments such as medicare, social security, medicaid, unemployment benefits, and other welfare programs are not calculated in GDP because they do not represent government purchases of goods and services, or in other words, they do not reflect goods and services currently produced and purchased.

They are instead, resources that the government takes either in the form of taxes, debt, or money supply, and allocates, or transfers, to specific recipients.