Differentiate between government purchases of goods and services and government transfer payments
What will be an ideal response?
Transfer payments are government payments such as unemployment compensation, Social Security benefits, welfare payments, and Medicare benefits. They are called transfer payments because they are essentially transferring funds from revenue accounts to those entitled to receive them. No current production is being performed by the recipients. Government purchases of goods and services such as military products and public employees’ salaries represent payment for the goods and services produced for the public sector.
You might also like to view...
Suppose the price of burgers increases from $2 to $3 each. The degree to which quantity demanded responds to this price increase depends on the
A) price elasticity of demand. B) the price elasticity of supply. C) income elasticity of demand. D) cross elasticity of demand.
If the growth rate of resources is 2 percent and per capita real output is growing at 4 percent, then total factor productivity has fallen by 4 percent
a. True b. False Indicate whether the statement is true or false
The marginal revenue product (MRP) establishes
A. A lower limit to profit on the sale of a unit of output. B. A lower limit to the wage rate demands of laborers. C. An upper limit to the productivity of a worker. D. An upper limit to the wage rate an employer is willing to pay.
The principle of comparative advantage suggests that governments should pursue free trade because it ______.
a. equitably distributes human capital worldwide b. enables countries to grow their economies through specialization c. prevents poor countries from pursuing technological advances d. reduces pressure on the economies of countries that have few natural resources