Question

Which of the following is an example of factor income

Answer 1

Answer:

Explanation:

“Returns received on factors of production: rent is return on land, wages on labor, interest on capital, and profit on entrepreneurship.” ... Transfer income is income received without providing any service or good in return. Gifts, subsidies, and donations, for example, belong to the transfer income category.

Factor income is income gained from either of the four factors of production. Factors of production include: land whose income is rent, labor whose income is wages and capital whose income is interest and entrepreneurship whose income is profit.

Answer 2

The completed question is,

Which of the following is an example of factor income

1 Interest received by the bank from the  producer

2 retirement pension

3 old-age pension

4 interest received by the bank from household

Answer:

The answer is 1. an Interest received by the bank from the producer.

Explanation:

• Factor income exists as an income obtained from the factors of production: the resources used to produce goods or services.
• Factor income on the use of land is named rent, income generated from labor is called wages, and income developed from capital is named profit.
• Factor income is most generally utilized in macroeconomic analysis, allowing governments to determine the distinction between gross domestic product (GDP) and gross national product (GNP).
• It can also be used to expose differences in income distribution.
• Examples of factor income exist as rent, wages, interest, and profit.

The answer is 1. an Interest received by the bank from the producer.

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