What are Transfer Payments?

Important banking qna for banking aspirants, which is helpful in banking exam.

Jun 17, 2015 14:46 IST

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.[1] Examples of certain transfer payments include welfare (financial aid), social security, and government making subsidies for certain businesses

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