Transfer payments are payments made by the government to individuals or groups without any goods or services being received in return. They are a redistribution of funds from one individual or group to another, usually based on need or income. Transfer payments are not a means by which government raises funds, nor are they counted in GDP. They are also not the same as government taxation.

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Transfer Payments

Question 420

Multiple Choice

Transfer payments:

A) are a means by which government raises funds.
B) are a redistribution of funds from one individual to another individual.
C) are counted in GDP.
D) is another term for government taxation.

Correct Answer: