Question : Which of the following is an example of a transfer payment?
Option 1: Wages earned by a factory worker
Option 2: Dividends received by a shareholder
Option 3: Pension payment to a retired government employee
Option 4: Rent paid by a tenant
Correct Answer: Pension payment to a retired government employee
Solution : The correct answer is (c) Pension payment to a retired government employee.
Transfer payments are payments made by the government or institutions to individuals or households without the expectation of receiving goods or services in return. These payments typically serve as transfers of income or redistribution of wealth to support specific individuals or groups.
In the given options, the pension payment to a retired government employee is an example of a transfer payment. It is a payment made by the government to provide financial support to retired individuals who have served as government employees. The retired employee receives the pension without providing any goods or services in return.
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