The aggregate income in an economy comprises:

Question

Quizplus · Accepted Answer

Aggregate income in an economy is the total income earned by factors of production in a specific period. The factors of production include labor (wages), land (rent), capital (interest), and entrepreneurship (profit). Therefore, option B, which includes wages, rent, profit, and interest, is the correct choice. Option A is incorrect as it includes transfer payments, which are not a factor of production. Option D is incorrect as it only includes net exports and transfer payments, which do not encompass all factors of production. Option E is incorrect as it only includes the income earned by U.S. firms and residents, neglecting the domestic factors of production.

The Aggregate Income in an Economy Comprises