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.

The correct answer is Option 1: Both (A) and (R) are true and (R) is the correct explanation.

Assertion (A): "Transfer payments, which include old age pensions, scholarships to students, and unemployment allowances, are also known as unilateral payments." This statement is true. Transfer payments are considered unilateral because they are made without any requirement for the recipient to provide goods or services in return.

Reason (R): "Transfer payments are the payments received without any corresponding flow of goods and services in return." This statement is also true. Transfer payments do not involve any reciprocal exchange of goods or services; the recipients are not required to provide anything in return. Thus, it is called unilateral payment. "Uni" means one, which is a one-sided transaction. For example: Unemployment allowances, charity etc.

The Reason (R) correctly explains Assertion (A) because it provides the rationale for why transfer payments are called unilateral payments.