In the expenditure method, a government unemployment allowance is directly included in which item?
Answer and explanation
Correct answer: It is not directly included in any final expenditure item
An unemployment allowance is a transfer payment. The recipient receives money without supplying a currently produced good or service to the government in return. Consequently, the payment itself is not counted directly in government final consumption expenditure, capital formation, or net exports. If the recipient later spends it on a final good or service, that later spending may be included under the relevant consumption category.
Frequently asked questions
What is the correct answer to this question?
It is not directly included in any final expenditure item
Why is this the correct answer?
An unemployment allowance is a transfer payment. The recipient receives money without supplying a currently produced good or service to the government in return. Consequently, the payment itself is not counted directly in government final consumption expenditure, capital formation, or net exports. If the recipient later spends it on a final good or service, that later spending may be included under the relevant consumption category.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Expenditure Method.
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