Old age pension is _________ income.

earned

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transfer

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increased

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none of the above

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Solution

The correct option is A transfer
Old age pension is paid to people after retirement who no longer provide any productive services in exchange. The government in this case collects taxes from working population and provide pension to older population in the form of government expenditure.
The pension is income for those who receive it, however, no new income is generated in the economy, hence it is a transfer payment.

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