Why is lottery prize money not included in the expenditure method?
Answer and explanation
Correct answer: It is a transfer payment, not a payment for current production
Lottery prize money is a transfer payment. The recipient receives income without supplying a currently produced good or service in exchange. Consequently, the prize does not represent expenditure on current production and is not included as a component of GDP through the expenditure method. Option B gives the precise classification and reason; option A is only a general description.
Frequently asked questions
What is the correct answer to this question?
It is a transfer payment, not a payment for current production
Why is this the correct answer?
Lottery prize money is a transfer payment. The recipient receives income without supplying a currently produced good or service in exchange. Consequently, the prize does not represent expenditure on current production and is not included as a component of GDP through the expenditure method. Option B gives the precise classification and reason; option A is only a general description.
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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