alleryWhich is a TRANSFER payment in the macroeconomic framework?
AWages paid by a firm to workers
BOld-age pension paid by the government to retired citizens
CRent paid to a landlord
DInterest paid on a corporate bond
Answer & Solution
Correct answer: B. Old-age pension paid by the government to retired citizens
Transfer payments involve no current production (pensions, scholarships, unemployment benefits, gifts).
They are excluded from GDP to avoid double-counting and from value-added measures.
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