When the factors of production are hired to produce output, _____.
A) the costliest resources available in the market are usually employed
B) the level of spending on goods and services will fall
C) income is generated for households to spend on goods
D) ﬁrms will use the income they earn to buy goods and services

Question

Quizplus · Accepted Answer

When factors of production (like labor, land, and capital) are employed to produce output, the payments made to these factors (wages, rent, interest, profits) generate income for households. This income is then available for households to spend on goods and services, stimulating economic activity.

When the Factors of Production Are Hired to Produce Output