Question

Give two examples of transfer payments from the rest of the world.

Answer 1

Here are two examples of transfer payments from the rest of the world:

1. Individuals or households in the private sector receive gifts and remittances from relatives or friends living abroad.
2. During emergencies like floods or earthquakes, private institutions or the government receive foreign aid or grants from international organisations or foreign governments.

These payments are unilateral, involve no production or service in return, and are included in private income but not in national income.