Payments which are made without any counterpart of services received by the payer are known as.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Transfer payments
Most money changes hands in return for something: wages for work, a price for goods. A pension, a scholarship, a prize or a gift, however, is paid without any counterpart of services received by the payer; the money is only transferred from one person to another. Such payments are called transfer payments.
Since nothing is produced in exchange, they are left out of national income, but they are added when the personal income of households is worked out.
Why the other options are incorrect
Option (2) Disposable Income — Incorrect. Personal disposable income is what households are left with after paying personal taxes and non-tax payments; it is an income total, not a kind of payment.
Option (3) Personal Income — Incorrect. Personal income is the income households actually receive from all sources. Transfer payments are one of the items added to reach it, but the term does not mean payments made without a service in return.
Option (4) Non transfer payments — Incorrect. There is no such category of payment.
NCERT (2025-26): “…The households receive transfer payments from government and firms (pensions, scholarship, prizes, for example) which have to be added to calculate the Personal Income of the households.… Introductory Macroeconomics — Glossary, ‘Transfer payments to households from the government and firms’: Transfer payments are payments which are made without any counterpart of services received by the payer. For examples, gifts, scholarships, pensions.…” |