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Assume All Capital Is Owned by Firms, Rather Than by Households

Question 101

Multiple Choice

Assume all capital is owned by firms, rather than by households. Under this assumption, capital is paid according to the value of its marginal product


A) only if this income is transmitted to households in the form of interest.
B) only if this income is transmitted to households in the form of dividends.
C) only if this income is transmitted to households in the form of interest or dividends.
D) regardless of whether this income is transmitted to households in the form of interest or dividends or whether it is kept within firms as retained earnings.

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