What is a common example of a transfer payment?

A common example of a transfer payment is disaster aid payments. Transfer payments are funds provided by the government to individuals or households without any goods or services being received in return. Disaster aid payments exemplify this concept as they typically assist individuals who have suffered losses due to natural disasters, helping them recover and rebuild.

In this context, disaster aid does not require any direct service or product exchange, making it a clear example of a transfer payment. Tax refunds, while they do involve transferring money back to individuals, are more closely related to overpayment of taxes rather than an aid or support measure. Sales tax collections pertain to the revenue the government collects from purchases and do not fit the definition of a transfer payment. Business grants, while helpful, are typically awarded to businesses for specific purposes and involve obligations or conditions that negate the simplicity of a transfer payment.