Current transfer and Capital transfer can be distinguished from each other in the following manner:
Current transfer is made out of the current income of the donor. But capital expenditure is paid out of the past income, viz. wealth or saving of the donor.
Current transfer is added to the current income of the recipient. But capital transfer contributes to the capital formation of a country.
Current transfer is used for consumption expenditure, which is short-run in nature. But capital transfer is used for the long-term expenditure of the recipient.
Features of GDP:
It is very important to know the features of GDP at market price. These features are stated below:
1. It is the money value of all final goods and services produced within the domestic territory of a country by the residents and non-residents.
2. Such final goods, which enter into market for sale, are valued at market prices prevailing in the accounting year.
3. There are some final goods, which are consumed by the producers themselves. One such example is residential house. Imputed value of such final goods and service is included in GDP.
4. Transfer payments, capital gains and income earned through illegal means are not included in GDP.
5. The value of second hand goods, financial capital assets such as shares and debentures are also not included in GDP.