Transfer payments involve no exchange of goods or services

Steps:

• Recall that transfer payments redistribute income without requiring current production or output from the recipient.
• Identify pensions as government payments to retirees, funded by taxes, not tied to ongoing work.
• Evaluate choices: A mentions taxes, irrelevant to transfer nature; B highlights no output, matching definition; C and D discuss post-receipt behavior, not the payment itself.
• Confirm B aligns with economic principle that transfers like pensions are non-factor payments.

Why B is correct:

• Transfer payments, per national income accounting, are unrequited transfers where recipients provide no current goods or services in exchange, unlike wages for output.

Why the others are wrong:

• A: Taxation on income does not define a transfer; it affects net receipt but not the payment type.
• C: Saving portions of income is a personal choice unrelated to whether the payment is a transfer.
• D: Spending the full amount describes consumption, not the absence of production required for transfers.

Final answer: B