PRC-3 · Chapter 13 · Question 36 of 50
Why do national statisticians strictly exclude 'unemployment benefits' and 'state pensions' when calculating the Gross Domestic Product?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Because they are 'transfer payments' that do not reflect any current production of new goods or services
Explanation
Transfer payments merely shuffle existing money from taxpayers to recipients without any corresponding economic output, so including them would falsely inflate GDP.
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