ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A transfer payment is a payment of money for which there are no goods or services exchanged. Transfer payments commonly refer to efforts by local, state, and federal governments to redistribute money to those in need. In the U.S., Social Security and unemployment insurance are common types of transfer payments.

Detailed explanation-2: -Profit, rent, transportation and freight charges are all two way payments and are made in return for something whereas retirement pension is a one way payment. Hence, retirement pension is an example of a transfer payment.

Detailed explanation-3: -The income received by an individual without rendering any productive service in return is known as Transfer Income. Transfer Income is a unilateral concept and is not included in National Income, as it does not involve the production of goods and services.

Detailed explanation-4: -It is a type of public expenditure made for the purpose other than procuring goods and services.

Detailed explanation-5: -The government considers transfer payments an income redistribution strategy since they pay them to people for social purposes and not for goods or services. Thus, the government collects income taxes from taxpayers and then pays a portion of the revenue to other people through transfer payments.