Question

Distinguish between ‘factor income’ and ‘transfer income’.

Class XII
National income

Answer 1

Some of the differences between factor income and transfer income are as follows:The difference between the two is whether or not the income (payment) received is for rendering productive service.Payment received in exchange for rendering productive service is factor income whereas the one received without providing any service (or good) in return is transfer income. Mind national income includes only factor incomes and not transfer incomes.

Answer 2

Following are the differences between the 'Factor Income ( FI )' and Transfer Income ( TI ) are :

1.  Factor Income is a payment received in exchange of any good or service while as Transfer Income is received without rendering any service or good.

2.  F. I includes wages, rents, profit and interest while as T.I comprises gifts, subsidies, donations, pensions, scholarships etc.

3.  F.I is a earned money and bilateral payment while as T.I is unearned and unilateral payment.

4.  F.I is included in National Income while as T.I is not.