If I am giving a land to someone for living and giving money to someone for consumption . Both are using land and money for consumption purpose then why one rent giving as consider factor income and other interest on money not consider factor income ?
Dear student,
Here it should be noted that when land is given for production/consumption purpose, the use is always to either produce goods and services or offer housing 'services'. Thus, no matter what the land is being loaned out for, the rent earned from that will be added to national income. On the other hand, the loan given for personal use, is not leading to any kind of production of good or any service. Hence, the interest from such loan is not added to national income.
Regards,
Here it should be noted that when land is given for production/consumption purpose, the use is always to either produce goods and services or offer housing 'services'. Thus, no matter what the land is being loaned out for, the rent earned from that will be added to national income. On the other hand, the loan given for personal use, is not leading to any kind of production of good or any service. Hence, the interest from such loan is not added to national income.
Regards,