Question

Which of the following describes the transfer payments component of public expenditure?

• A. Expenditure on goods and services that the government consumes or uses in providing public services.
• B. Payments made by the government to firms for the purchase of goods and services.
• C. Expenditure incurred by the government on infrastructure projects such as roads and bridges.
• D. Payments made to individuals without any corresponding service or good being provided in return.

Answer 1

Answer:

D. Payments made to individuals without any corresponding service or good being provided in return.

• Transfer payments are unrequited payments, meaning the government gives money to individuals (like pensions, unemployment benefits) without receiving a direct good or service in return.