Transfer Payments Defined as Non-Productive Exchanges

Steps:

• Recall that transfer payments are economic transactions where no goods or services are provided in return.
• Evaluate options against this definition: identify what distinguishes transfers from productive economic activities.
• Eliminate options requiring specific mediums (cash, banking) or sources (government).
• Confirm the core trait: transfers do not contribute to production, aligning with non-productive activity.

Why D is correct:

• Transfer payments, per economic definitions (e.g., in national income accounting), involve redistribution without current production, such as welfare or subsidies, making them non-productive.

Why the others are wrong:

• A: Transfers can be in-kind (e.g., food stamps), not just cash.
• B: No banking required; can be direct or non-monetary.
• C: Private transfers (e.g., family remittances) also qualify, not solely government.

Final answer: D