An example of transfer payments in national income accounting is

A.

Money transferred to another country

B.

Unemployment allowance paid to the citizens

C.

The amount paid to a worker on transfer

D.

Transfer of funds from one bank to another

Correct answer is B

Transfer payment are payment of receipts not resulting from contribution to productive activities in the economy. They are mere transfers from one person to another, for example: pension, bursary, award, gift, unemployment benefit etc. When estimating or calculating national income, transfer payment are excluded.