Transfer payments are:

CA Foundation · Business Economics · MTP · April 2025
Transfer payments are:
(A) A. excluded when calculating GDP because they only reflect inflation.
(B) B. excluded when calculating GDP because they do not reflect current production.
(C) C. included when calculating GDP because they are a category of investment spending.
(D) D. included when calculating GDP because they increase the spending of recipients.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. excluded when calculating GDP because they do not reflect current production.

Topics: Determination of National Income

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