While estimating national income by the income method, which of the following is included as factor income?
Answer and explanation
Correct answer: Imputed rent of an owner-occupied house
Imputed rent represents the estimated value of housing services supplied by an owner to himself or herself. Although no actual money changes hands, the house provides a current productive service, so its estimated rental value is included as operating surplus or factor income. A pension and lottery prize are transfer receipts, while selling old shares only transfers ownership of an existing financial asset and does not create current production.
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What is the correct answer to this question?
Imputed rent of an owner-occupied house
Why is this the correct answer?
Imputed rent represents the estimated value of housing services supplied by an owner to himself or herself. Although no actual money changes hands, the house provides a current productive service, so its estimated rental value is included as operating surplus or factor income. A pension and lottery prize are transfer receipts, while selling old shares only transfers ownership of an existing financial asset and does not create current production.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Income Method.
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