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Transfer Payments
Are any payments made to households by the government that are not made in return for the services of factors of production i.e. there is no Quid pro Quo. Such payments do not lead directly to any increase in output and for this reason they are not included in the nation GNP.
The Firm The unit that uses factors of production to produce commodities then it sells either to other firms, to household, or to central authorities. The firm is thus the uni
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