Transfer payments by governments are viewed as
Show Hint
- Negative taxes
- Indirect taxes
- Non-tax revenues
- Transfer of wealth
The Correct Option is A
Solution and Explanation
Step 1: Understand what transfer payments are.
Transfer payments are payments made by the government to individuals without any exchange of goods or services. Examples include unemployment benefits, pensions, and subsidies. These payments do not directly relate to the production of goods or services.
Step 2: Interpret the economic classification.
Transfer payments are termed "negative taxes" because they are payments from the government to individuals, essentially reversing the usual flow of taxes. Rather than collecting revenue, the government is disbursing funds.
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