How does a transactional leader motivate subordinates?

Correct answer: By rewards and punishments. Transactional leaders motivate through exchange: rewards for good performance and corrective action or punishment for poor performance.

• By punishments: Using punishments alone leaves out the rewards side of the exchange.
• By rewards: Using rewards alone leaves out the corrective side of the exchange.
• None of these: “None of these” is incorrect because rewards and punishments is correct.