What is the primary purpose of a government transfer payment?
Correct answer: B. To provide income or support without receiving a current good or service in return
- A. To purchase machinery for a government department
- B. To provide income or support without receiving a current good or service in return
- C. To raise the market price of imported goods
- D. To repay the principal of public debt
Explanation
Transfer payments, such as pensions or certain income-support payments, redistribute purchasing power without a current exchange of goods or services for the government. Government purchases, import duties and debt repayment are separate fiscal transactions.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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