Question

What does GDP calculated via factor payments include?

1) Wages and salaries
2) Rent
3) Interest
4) Profit

Answer 1

GDP calculated via factor payments includes wages and salaries, rent, interest, and profit.

Step-by-step explanation:

Factor payments are what the firm pays for the use of the factors of production. From the firm's perspective, factor payments are costs. From the owner of each factor's perspective, factor payments are income.

Factor payments include:

1. Wages and salaries: Payments to workers for their labor.
2. Rent: Payments for the use of land or other properties.
3. Interest: Payments for the use of borrowed money or financial capital.
4. Profit: Income received by the entrepreneur or business owner after deducting all expenses from total revenue.