Asked by Anissa Hoyte on May 10, 2024
Verified
A major distinction between government purchases and government transfer payments is that
A) government purchases divert resources from private uses to public uses, while transfer payments do not.
B) transfer payments divert resources from private uses to public uses, while government purchases do not.
C) government purchases have to be approved by Congress, while transfer payments do not.
D) government purchases of goods and services have increased more rapidly during the past 20 years than have transfer payments.
Government Purchases
Government purchases involve the spending by government entities on goods and services, including investments in public infrastructure, which can influence economic activity.
Transfer Payments
Payments made by the government to individuals or entities without any service or goods being received in return, such as social security benefits.
- Differentiate between government purchases and transfer payments in terms of their impact on resource allocation.
Verified Answer
AR
Ashley ReynosaMay 15, 2024
Final Answer :
A
Explanation :
Government purchases involve the acquisition of goods and services for public use, thereby reallocating resources from private to public sectors. Transfer payments, such as social security or unemployment benefits, transfer money from the government to individuals without directly purchasing goods or services, thus not reallocating resources in the same way.
Learning Objectives
- Differentiate between government purchases and transfer payments in terms of their impact on resource allocation.