Q77 (CDS-I/2016) Economy › Government Finance & Budget › Budget classification Answer Verified

Which of the following is / are the example(s) of Transfer Payment(s) ? 1. Unemployment Allowance 2. Payment of Salary 3. Social Security Payments 4. Old age Pension Select the correct answer using the code given below:

Result

Your answer: — · Correct: C

Explanation

Transfer payments are unilateral or non-exchange transactions where the government provides money to individuals without receiving any goods or services in return [2]. They are primarily aimed at income redistribution and social welfare. Unemployment allowances are classic examples as they support individuals during job losses [1]. Social security payments and old-age pensions are also categorized as transfer payments because they provide financial assistance to the elderly or vulnerable without a current service counterpart [3]. In contrast, the payment of salary is not a transfer payment; it is a factor payment made in exchange for productive services rendered by employees. While pensions to retired employees are sometimes debated, general old-age pensions and social security are universally recognized as transfers in national accounting [3]. Therefore, items 1, 3, and 4 are transfer payments, while item 2 is an exchange-based expenditure.

Sources

[1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > Factor Cost = Market Price - Net Indirect Taxes > p. 6
[2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > National Income Identity for an Open Economy > p. 105
[3] https://www.investopedia.com/terms/t/transferpayment.asp

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Which of the following is / are the example(s) of Transfer Payment(s) ? 1. Unemployment Allowance 2. Payment of Salary 3. Social Security Payments 4. Old age Pension Select the correct answer using the code given below:

Explanation

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