Which of the following best defines 'Unilateral Transfers' in the context of international transactions?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Payments made by one party without expecting any return in the future.
Unilateral Transfers refer to one-way payments made between countries where the sender does not expect anything in return. These are commonly seen in:
-
Gifts
-
Donations
-
Remittances sent by migrants to their home country
-
Grants and aid given by one government to another without obligation
These are recorded in the current account of the Balance of Payments.