Why are transfer payments not a component of GDP? - ProProfs Discuss
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Why are transfer payments not a component of GDP?



Asked by Wyatt Williams, Last updated: Apr 19, 2024

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2 Answers

John Adney

John Adney

John Adney
John Adney

Answered May 17, 2017

GDP measures the final sale of goods and services in the economy. Transfer payments are government subsidies and payments like social security. Therefore, transfer payments are not included in GDP because they are not final sales of goods and services. Hence, we have a system where goods and services are made.

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John Smith

John Smith

John Smith
John Smith

Answered Nov 10, 2016

They do not generate wealth
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