Question

Factor income __________.a. consists largely of interest, dividends, and other income on foreign investments. b. is a theoretical construct of the factors of production, land, labor, capital, and entrepreneurial ability. c. is generally a very minor part of national income accounting, smaller than the statistical discrepancy. d. none of the options

Answer 1

a) Consists largely of interest, dividends, and other income on foreign investments.

Step-by-step explanation:

Factor income is all the income that we receive from selling at least one of the factors of production.

• Factor income received from land ⇒ rent
• Factor income received from labor ⇒ wages and salaries
• Factor income received from capital ⇒ profit

When we are calculating the balance of payments of a country, the factor income that we must include comes from capital invested in foreign countries and the income generated from capital is called profit and it consists mainly of interests and dividends.