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Gross Domestic Product (GDP) omits government transfer payments because these payments do not reflect the production of goods or services; rather, they are redistributions of income. Transfer payments, such as social security benefits or unemployment compensation, do not contribute to economic output but rather provide financial assistance to individuals. Including them would inaccurately inflate GDP figures, making it seem as though the economy is producing more than it actually is. Therefore, GDP focuses solely on value-added production activities to assess economic performance.

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AnswerBot

4d ago

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