Country X received $2 billion from country Y as transfer payments.This receipt will be considered by country X as aA. grant.B. loan.C. subsidy.D. tax revenue
Question
Country X received $2 billion from country Y as transfer payments. This receipt will be considered by country X as a
A. grant.
B. loan.
C. subsidy.
D. tax revenue.
Solution
The receipt of $2 billion from country Y by country X as transfer payments will be considered by country X as a A. grant.
Here's why:
A. Grant: This is a financial aid given by one country to another, which does not need to be repaid. In this case, the $2 billion received by country X is a transfer payment, which is typically a one-way payment. Therefore, it can be considered a grant.
B. Loan: This is a sum of money that is expected to be paid back with interest. The question does not mention any obligation for country X to repay the money, so it is not a loan.
C. Subsidy: This is a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low. The question does not mention any such purpose for the money, so it is not a subsidy.
D. Tax Revenue: This is the income that is gained by governments through taxation. The money in question is not being collected as a result of a tax, so it is not tax revenue.
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