An example of transfer payments in national income accounting is?

A. money transferred to another country
B. transfer of funds from one bank to another
C. unemployment allowance paid to the citizens
D. the amount paid to a worker on transfer

Correct Answer:

Option C – unemployment allowance paid to the citizens

Explanation

Transfer payment are payment of receipts not resulting from contribution to productive activities in the economy. They are mere transfers from one person to another, for example: pension, bursary, award, gift, unemployment benefit etc. When estimating or calculating national income, transfer payment are excluded.