DECA+ Business Management and Administration Practice Exam

What are transfer payments?

1. Payments for services rendered

2. Monies paid by the government with no goods or services in exchange

3. Funds allocated for business expansion

4. Money spent on advertising

The correct answer is: Monies paid by the government with no goods or services in exchange

Transfer payments are defined as economic transactions where the government provides money to individuals without receiving any goods or services in return. This can include various forms of financial assistance such as social security benefits, unemployment compensation, and welfare payments. The primary purpose of transfer payments is to redistribute income and provide support to individuals who are in need, rather than to purchase goods or services. The other options do not accurately describe transfer payments. Payments for services rendered involve an exchange where a product or service is provided, which does not align with the nature of transfer payments. Funds allocated for business expansion and money spent on advertising are both examples of business expenditures rather than government payments to individuals. Hence, the defining characteristic of transfer payments is the absence of an exchange of goods or services, which is why the correct answer is focused on the government’s monetary provision without reciprocal services.