Question

Factor incomes are used by the factors of production to purchase goods and services, which determines the distribution of the output produced.

• A. True
• B. False

Answer 1

The correct option is A True

Factor income directs the flow of factors of production in the market but it also contributes to the consumption expenditure or aggregate demand in the economy as if factor income increases the aggregate demand also increases and if factor income decreases the aggregate demand also decreases.