Q. Consider the following statements:

1. Transfer payments are the receipts which the residents of a country get for 'free', without having to provide any goods or services in return.
2. Transfer Payments are given only by private citizens living abroad.

Which of the above is / are correct?
Answer: Only 1
Notes: Only the first statement is correct. The second statement is incorrect. Transfer payments are the receipts which the residents of a country get for ‘free’, without having to provide any goods or services in return. They consist of gifts, remittances and grants. They could be given by the government or by private citizens living abroad.