Question

Which one of the following is not a component of domestic factor income?

विकल्प

• Compensation of employees

• Operating surplus

• Mixed income of self-employed

• Value of intermediate goods

Answer 1

Value of intermediate goods

Explanation:

Domestic factor income includes:

• Compensation of employees (wages, salaries, benefits)
• Operating surplus (profit, rent, interest)
• Mixed income of self-employed (income that is both labor and capital in nature)

However, the value of intermediate goods is not a factor of income. It is a cost of production and not a payment to factors of production. Including it would result in double counting, which is avoided in national income accounting.