Which transaction is a transfer payment?

A) The government pays an employee by making a direct transfer to the employee's bank account.
B) An army officer transfers part of her pay to the government to pay her taxes.
C) A senior citizen receives a Social Security payment.
D) Government spends additional funds on infrastructure.

Question

Ahmad Asyraaf · Accepted Answer

Final Answer : C, Explanation :  A transfer payment is a payment made by a government to an individual or group for which no goods or services are exchanged. In option C, a senior citizen receives a Social Security payment, which is a transfer payment as it is made without any exchange of goods or services. Option A and B involve a direct exchange of funds for services rendered (wages or taxes), while option D involves government spending on infrastructure, which is an exchange of funds for goods or services.

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