Factor income

Factor income,

Definition of Factor income:

  1. Factor income is the flow of income that is derived from the factors of production—the general inputs used in the production of goods or services in order to make an economic profit. Factors of production include land, labor, and capital.

  2. Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is called profit. The factor income of all normal residents of a country is referred to as the national income, while factor income and current transfers together are referred to as private income.

  3. Returns received on factors of production: rent is return on land, wages on labor, interest on capital, and profit on entrepreneurship.

How to use Factor income in a sentence?

  1. Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is called profit.
  2. Factor income is income received from the factors of production: the inputs used in the production of goods or services in order to make an economic profit.
  3. It can be used to expose disparities in income distribution.
  4. Factor income is most commonly used in macroeconomic analysis, helping governments to determine the difference between gross domestic product (GDP) and gross national product (GNP).

Meaning of Factor income & Factor income Definition