Question

Suppose profits are less than zero. From this it follows that:

A. the sum of employee compensation, rents, and interest equals aggregate income.
B. aggregate income is less than the value of final output.
C. aggregate income exceeds aggregate production.
D. the sum of employee compensation, rents, and interest exceeds aggregate income.

Answer 1

D. the sum of employee compensation, rents, and interest exceeds aggregate income.

Step-by-step explanation:

Aggregate income is defined as the total income in an economy of a company that does not take into account inflation, taxes, or double counting.

Aggregate income is equal to summation of employee compensation, interest, rent, and profits.

If profits are less than zero it follows that the other elements of aggregate income, that is the sum of employee compensation, rents, and interest exceeds aggregate income.