Interest paid by a household on a loan taken to buy a car is

a factor payment, like all interestCorrect answerYour answerpart of gross investmentCorrect answerYour answernot a factor payment, because the loan financed consumption, not productionCorrect answerYour answera subsidyCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

Interest is a factor income only when the borrowed money is used in production.
A consumer loan finances consumption, so the interest on it is treated as a transfer.

Concept: Interest on consumer loans
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsWhat is counted and what is not

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Interest paid by a household on a loan taken to buy a car is

Explanation