Question

Which of these is an example of in-kind transfers (as opposed to cash transfers)?

          a.       unemployment compensation

          b.       Supplemental Nutrition Assistance Plan (SNAP) – also known as “food stamps”

          c.       Temporary Assistance to Needy Families (TANF)

          d.       Earned Income Tax Credit (EITC)

Answer 1

In-kind transfers are when people receive goods and services from the government. Whereas cash transfers are when people receive money/cash from the government in order to purchase any goods and services.

a. Unemployment compensation is a transfer of money, thus it is a cash transfer.

b. Food stamps is an example of in-kind transfers as people receive food stamps through which they receive goods and services.

c. Temporary assistance to needy families is an example of cash transfers where cash assistance is provided to needy families.

d. Earned income tax credit is also a cash transfer where for low income households tax rates are lowered and the money is credited to their accounts.

Thus b is the answer.