Suppose the government sends additional transfer payments to households during a recession. Why might this have little effect on the economy? a. Transfer payments do not count as part of GDP so by definition this can't have any effect. b Households may anticipate higher taxes in the future to pay off the debt incurred by sending the transfer payments. The money sent by the government will be saved and not spent. c This will only have little effect if the multiplier is very large (m>3) d Since nothing is produced in exchange for the transfer payments, the government is not producing any result.