Transfer payments are injections into the circular flow of income and expenditure model.

Question

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Transfer payments, such as welfare, social security, and unemployment benefits, are government payments to individuals or households that are intended to redistribute income and provide social assistance. They do not involve any production of goods or services, but they do contribute to household incomes, which in turn can be spent on goods and services, thus acting as an injection into the circular flow of income and expenditure model.

Transfer Payments Are Injections into the Circular Flow of Income