Question : Subsidies are ____________ income. Profit is _________ income.
Option 1: Factor, transfer.
Option 2: Transfer, factor.
Option 3: Transfer, transfer
Option 4: Factor, factor.
Answer (1)
Correct Answer: Transfer, factor.
Solution :
Factor income is compensation obtained in exchange for delivering productive service. Example- Rent, wages, interest and profit.
Transfer income is compensation received in exchange for no services (or goods).
Example- Old age pension, schlorships, unemployment benefits.
Hence, Option B is correct.
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