Economic Awareness - Sectors of Indian Economy
In the Income Method, 'Interest' refers to income earned by:
In the Income Method, 'Interest' refers to income earned by:
medium Q6 of 15
Step-by-Step Solution
Step 1: Define 'Interest' in Income Method
Interest is the income earned by capital owners on their investments in production.Step 2: Differentiate types of interest
Interest earned by banks on loans is intermediate income, not factor income. Interest paid by households or government securities are transfer payments or financial transactions, excluded from National Income.Final Answer:
Capital owners on their investments → Option BQuick Check:
Interest in Income Method = Income of capital owners ✅
Quick Trick: Interest = income of capital owners, not financial transfers.
Common Mistakes:
- Including all interest payments as factor income.
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