Which of the following checks issued by the government represents a transfer payment?
A) The federal government pays a defense contractor for development of a missile system.
B) The federal government pays a retiree her Social Security benefits.
C) The state of Oregon pays a construction firm for its work in repairing a state highway.
D) The state of Illinois pays groundskeepers at the state capitol building their weekly wages.

Question

Quizplus · Accepted Answer

A transfer payment is a payment made by the government to individuals or families for which no direct goods or services are exchanged. Social Security benefits are an example of a transfer payment because individuals receive money from the government without providing any goods or services in exchange. Choice A represents a payment for a good or service (missile development), while choices C and D represent payments for goods or services provided by private businesses or individuals to the government.

Which of the Following Checks Issued by the Government Represents