When comparing GNP and GDP, which statement is true regarding transfer payments?

Transfer payments, such as social security, unemployment benefits, and welfare payments, are not included in either Gross National Product (GNP) or Gross Domestic Product (GDP). Both GNP and GDP are measures of economic activity that focus on the value of goods and services produced within a specific time period.

GDP is concerned with the total value of all goods and services produced within a country's borders, regardless of who produces them. It measures economic output based on production and does not include transfer payments since these payments do not correspond to the production of goods and services.

Similarly, GNP measures the value of goods and services produced by the residents of a country, including those produced abroad but excluding what foreigners produce domestically. Transfer payments are not linked to the economic output of goods and services and are merely redistributions of income.

By excluding transfer payments, both measures provide a clearer picture of economic productivity and performance. Thus, asserting that neither GNP nor GDP includes transfer payments accurately reflects the nature of these economic indicators.