If person A give land to person B for living or consumption and person A give money to person c for consumption . In return person B give rent and person C give interest on money . Both person B and C are using factor for consumption purpose but person B giving rent is consider factor income and person C giving interest is not consider factor income . Why this discrimination happening that person B giving rent consider factor income and person c giving interest is not consider factor income and both factor are using for consumption purpose
Dear student, Factor income refers to the flow of income that is derived from factor of production. The interest received in the above mention question will not be considered as factor income as it is a non-factor receipt, as the loan is not used for production but for consumption. Regards