Which statement best represents a transfer payment?
A) You transfer $1000 from your bank account to a mutual fund.
B) The bank transfers $10 quarterly interest to your savings account.
C) The government sends your grandfather his pension cheque.
D) Your employer automatically transfers $100 each month from your wages to a nontaxable medical spending account.

Question

Quizplus · Accepted Answer

A transfer payment is a payment made by the government to an individual or a group of individuals without any goods or services being exchanged. Option C best represents a transfer payment as it depicts the government sending a pension cheque to an individual without any exchange of goods or services. Option A represents an investment, option B represents interest earned on savings, and option D represents a payroll deduction for a specific purpose.

Which Statement Best Represents a Transfer Payment