A neutral transfer is a transfer of income that doesn't alter either party's behavior and is costless. It doesn't necessarily result in a positive impact on the utility of either party or maintain at least a minimum income for both parties. It also doesn't have to involve a third party. Option D is the most accurate definition.

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A Neutral Transfer

Question 6

Multiple Choice

A neutral transfer

A) is any transfer of income by a third party
B) is any transfer of income that positively impacts the utility of at least 1 party
C) is any transfer of income that results in both parties maintaining at least a minimum income
D) is any costless transfer of income that doesn't alter either party's behavior

Correct Answer: