Question

1
7.
The sum of factor payments is equal to
(Choose the correct alternative.)
(a) Domestic Income
(b) National Income
(c) Per Capita Real Income
(d) Per Capita Nominal Income.​

Answer 1

(b)

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Answer 2

The sum of the factor payments in an economy is also known as National Income.Therefore,the correct answer is option b) or National Income.

Explanation:

In Macroeconomics,the factor payments also represent the overall value added at the production cost during the production of all the goods and services in an economy within a certain period of time.The value added basically encompasses the productive capacity or contributions of the factors/inputs of production in the entire production process in the economy.This value added contribution is added to the calculation of National Income.Therefore,since the factor payments also reflect the value added of the factor/inputs of production,the sum of all the factor payments also constitutes National Income.