In the question given below, there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options.

Assertion (A)- Transfer payments which include old age pensions, scholarships to students, and unemployment allowances are also known as unilateral payments.

Reason (R)- Transfer payments are the payments received without any corresponding flow of goods and services in return.

Both (A) and (R) are true and (R) is the correct explanation.

In an economy, there are 2 types of payments made: Transfer payments and factor payments.

Transfer payments are those payments that are received without any corresponding good or service. Thus, it is called unilateral payment. "Uni" means one, which is a one-sided transaction. For example: Unemployment allowances, charity etc.