Which government expenditure is most directly classified as a transfer payment?
Correct answer: A. A pension paid to an eligible retired person
- A. A pension paid to an eligible retired person
- B. The construction of a government hospital
- C. The purchase of police vehicles
- D. The salary of a public school teacher
Explanation
A transfer payment gives income to a recipient without requiring a current supply of goods or services in return. Pension payments fit this definition, while the other items purchase goods or services.
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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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