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If the government builds a public park that is free to use what is correct regarding the construction expenditure?

Answer and explanation

Correct answer: It will be included in GDP as government final expenditure

GDP counts current production of final goods and services purchased by the government, not merely activities that charge users a fee. Building the park requires construction services and materials produced during the period, so the government’s purchase is recorded as government final expenditure. Free public access does not turn the construction into a transfer payment or remove it from GDP. A transfer is a payment without current production in return.

Related tags

GdpGovernment-ExpenditurePublic-GoodsFinal-ExpenditureGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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