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Explain the following economic terms, giving an appropriate example in each: - Transfer Payments; - Benefits-in-kind; - Net Factor Income from the Rest of the World. - Leaving Cert Economics - Question 8 - 2020
Question 8
Explain the following economic terms, giving an appropriate example in each: - Transfer Payments; - Benefits-in-kind; - Net Factor Income from the Rest of the World... show full transcript
Worked Solution & Example Answer:Explain the following economic terms, giving an appropriate example in each: - Transfer Payments; - Benefits-in-kind; - Net Factor Income from the Rest of the World. - Leaving Cert Economics - Question 8 - 2020
Step 1
Transfer Payments
Answer
Transfer payments refer to transactions where money is distributed without any exchange of goods or services. This means that these payments do not involve the recipient providing any work or contribution in return. A common example of transfer payments is unemployment benefits, where the government provides financial assistance to individuals who are currently without work.
Step 2
Benefits-in-kind
Answer
Benefits-in-kind are non-monetary compensation provided to employees or individuals, which can take various forms, such as goods or services rather than cash. For instance, an employee may receive a company car as a part of their remuneration package. This payment is made in the form of a service (the use of the car) rather than direct cash.
Step 3
Net Factor Income from the Rest of the World
Answer
Net Factor Income from the Rest of the World represents income earned by the factors of production owned by residents of a country operating abroad, minus the income earned by foreign factors of production located in that country. For example, consider the income earned by Irish businesses overseas that is brought back to Ireland, minus any earnings made by foreign businesses in Ireland sent back to their home countries. This can be exemplified by the income returned to Ireland by companies such as Ryanair, less the income earned by companies like Facebook that is sent back to their countries of origin.