Homework Answers
Answer: 2nd option
It could be reported as personal consumption.
Social security payment by the government is not the usual government expenditure, since it comes under transfer payments. Therefore, this expenditure must not be added with country’s GDP; rather it could be treated as personal consumption and counted as GDP if it is spent after receiving. Therefore, it should be reported as personal consumption.
Other options are not correct:
1st option: this is not applicable as discussed above.
3rd option: social security payment is not an investment, since contributions are made both employer and employee.
4th option: since the outlay is from government, this is not a residential investment.
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