Suppose that the government collects 3 million in taxes pays

Suppose that the government collects $3 million in taxes, pays $2 million in Social Security benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million to sit at their desks and work as little as possible. What is the government\'s contribution to GDP?

Solution

socal security benefits are not included in GDP, only indirect business taxes are included

government\'s contribution to GDP = workers wages + interest

= 0.5 + 1 = $1.5