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With reference to the government expenditure in India, which of the following constitutes Transfer Payments?
1. The payments which are made by the government to its employees.
2. The Interest payments made to foreign countries on loans taken.
3. The payments which are made as financial aid in a social welfare programme.
1. The payments which are made by the government to its employees.
2. The Interest payments made to foreign countries on loans taken.
3. The payments which are made as financial aid in a social welfare programme.
Select the correct answer code:
- a)1 and 2 only
- b)1 and 3 only
- c)3 only
- d)2 and 3 only
Correct answer is option 'C'. Can you explain this answer?
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With reference to the government expenditure in India, which of the fo...
- In macroeconomics and finance, a transfer payment is a redistribution of income and wealth by means of the government making a payment, without goods or services being received in return.
- These payments are considered to be non-exhaustive because they do not directly absorb resources or create output. Examples of transfer payments include welfare, financial aid, social security, and government subsidies for certain businesses.
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With reference to the government expenditure in India, which of the fo...
Transfer Payments in Government Expenditure in India
Transfer payments are a type of government expenditure that does not directly contribute to the production of goods and services but rather involves the redistribution of income. In the context of government expenditure in India, the following points explain which items constitute transfer payments:
1. Payments made as financial aid in a social welfare programme:
- This includes payments such as social security benefits, unemployment benefits, pensions, and other welfare programs aimed at providing financial assistance to individuals or groups in need.
- These payments do not involve the exchange of goods or services but are intended to support the well-being of the recipients.
2. The payments which are made by the government to its employees:
- Payments made to government employees, such as salaries, wages, and benefits, are not considered transfer payments.
- These payments are considered as part of government consumption expenditure, as they are made in exchange for the services provided by the employees.
3. Interest payments made to foreign countries on loans taken:
- Interest payments made to foreign countries on loans taken by the government are considered as debt service payments rather than transfer payments.
- These payments represent the cost of borrowing money from foreign sources and are a part of the government's debt obligations.
Therefore, in the context of government expenditure in India, transfer payments specifically refer to the payments made as financial aid in social welfare programs. Payments made to government employees and interest payments on foreign loans are not classified as transfer payments.
Transfer payments are a type of government expenditure that does not directly contribute to the production of goods and services but rather involves the redistribution of income. In the context of government expenditure in India, the following points explain which items constitute transfer payments:
1. Payments made as financial aid in a social welfare programme:
- This includes payments such as social security benefits, unemployment benefits, pensions, and other welfare programs aimed at providing financial assistance to individuals or groups in need.
- These payments do not involve the exchange of goods or services but are intended to support the well-being of the recipients.
2. The payments which are made by the government to its employees:
- Payments made to government employees, such as salaries, wages, and benefits, are not considered transfer payments.
- These payments are considered as part of government consumption expenditure, as they are made in exchange for the services provided by the employees.
3. Interest payments made to foreign countries on loans taken:
- Interest payments made to foreign countries on loans taken by the government are considered as debt service payments rather than transfer payments.
- These payments represent the cost of borrowing money from foreign sources and are a part of the government's debt obligations.
Therefore, in the context of government expenditure in India, transfer payments specifically refer to the payments made as financial aid in social welfare programs. Payments made to government employees and interest payments on foreign loans are not classified as transfer payments.
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With reference to the government expenditure in India, which of the following constitutes Transfer Payments?1. The payments which are made by the government to its employees.2. The Interest payments made to foreign countries on loans taken.3. The payments which are made as financial aid in a social welfare programme.Select the correct answer code:a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)2 and 3 onlyCorrect answer is option 'C'. Can you explain this answer?
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