Economic Awareness - Sectors of Indian Economy
Which of the following is TRUE about transfer payments in the context of GDP expenditure method?
Which of the following is TRUE about transfer payments in the context of GDP expenditure method?
medium Q5 of 15
Step-by-Step Solution
Step 1: Understand transfer payments
Transfer payments are payments without exchange of goods or services, like pensions or subsidies.Step 2: Apply GDP rules
Since transfer payments do not reflect production, they are excluded from GDP calculation.Final Answer:
They are excluded from GDP calculation → Option AQuick Check:
Transfer payments excluded from GDP = true ✅
Quick Trick: Exclude transfer payments when calculating GDP by expenditure.
Common Mistakes:
- Including transfer payments as government expenditure.
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