Question : Which of the following is an example of a transfer payment?
Option 1: A salary paid to an employee
Option 2: A pension paid to a retiree
Option 3: A fee paid to a consultant
Option 4: A payment for a good or service
Correct Answer: A pension paid to a retiree
Solution : The correct answer is b) A pension paid to a retiree.
A transfer payment refers to a payment made without the recipient providing goods or services in exchange. It is a transfer of income from one party to another, often for social welfare or redistribution purposes. Transfer payments are typically made by the government or other organizations to individuals or households.
A pension paid to a retiree is an example of a transfer payment. It is a regular payment made to a retired individual as a form of income support or social security.
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