Which of the following best explains why transfer payments are classified as non-productive in the context of GDP calculations?

Transfer payments are classified as non-productive in GDP calculations because they do not represent the creation of goods or services. Instead, these payments, such as Social Security or unemployment benefits, are simply money given from the government to individuals without any exchange of work or production. For example, when the government pays a person unemployment benefits, that person receives money, but no new product or service is created in the economy as a result. This is different from spending on things like roads or schools, which contributes to the economy by creating jobs and physical structures. Therefore, while transfer payments help support individuals, they don’t contribute to the overall production measured by GDP.