Question

What is the difference between an exchange and nonexchange transaction? Do governments have both of these types of transactions? Give examples of what you find.

Answer 1

Difference between Exchange and Non-Exchange Transaction–

An exchange is one in which each party gain and sacrifices something of approximate equal value. A non-exchange transaction is one, in which one party gains something of value without directly sacrificing any value in exchange and the other party sacrifices something of value and not gain anything directly from the party.

Government make both Exchange and Non- Exchange Transactions

Examples of Exchange Transactions

1. The purchase and sale of goods and services for Administration and Development purposes

2. Government gives government properties for lease for the purpose of bringing businesses.

3. Salary given to government employees.

Examples of Non-Exchange Transactions

1. Fines & penalties: Government collects fines and penalties for violation of rules and regulations.

2. Grants: Government provides grants to businesses when certain conditions are met. These grants are given for various reasons such as job creation etc.

3. Subsidies: Government provides subsidies for some essential products or products that reduces environmental damage