For purposes of calculating GDP using the expenditure approach,which of the following payments is NOT included in the government spending component?

A) Social Security pensions
B) The wages paid by a local government to its road crew
C) The wages paid by a state government to the workers in its welfare department
D) The federal government's purchase of a submarine from a shipbuilder
E) None of the choices are correct

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Tamara Johnson · Accepted Answer

Final Answer : A, Explanation :  Social Security pensions are not included in government spending as they are a transfer payment and not a purchase of goods or services. Government spending includes purchases of goods and services by the government, such as wages paid to government employees, and purchases of goods and services from private sector businesses, such as the federal government's purchase of a submarine from a shipbuilder.

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