Definition
- Transfer payments
- Transfer payments are payments by the government to individuals, such as pensions and benefits, left out because they do not represent production.
Example
Can you think of an example of transfer payments?
Universal Credit paid to a jobseeker moves income from taxpayers to her, and nothing is produced in return. When she spends it on food, the food counts in GDP, once.
Test yourself
Can you name the five things GDP leaves out or misses?