What are Transfer Payments?
• Transfer Payment refers to grants or other payment not made in return for a productive service.
• It is a redistribution of income in the market system. These payments are considered to be non-exhaustive because they do not directly absorb resources or create output.
• In other words, the transfer is made without any exchange of goods or services. Examples of certain transfer payments include welfare (financial aid), social security, and government making subsidies for certain businesses