Explain the following components of domestic factor income:(i) Compens

1.	Explain the following components of domestic factor income:(i) Compensation of employees (ii) Operating surplus
Answer» (i) Compensation of employees: It is defined as all payments made by producers to their employees in the form of wages and salaries and other payments made in cash and kind and social security benefits in return for labour services. Labour income includes wages and salaries, supplementary labour income and payment in kind. (ii) Operating surplus: It is the income earned from the ownership and control of capital and is also known as income from property and entrepreneurship. Capital income includes interest, rent, profits, royalties, dividends and other similar incomes.

Explain the following components of domestic factor income:(i) Compensation of employees (ii) Operating surplus

Answer»

(i) Compensation of employees: It is defined as all payments made by producers to their employees in the form of wages and salaries and other payments made in cash and kind and social security benefits in return for labour services. Labour income includes wages and salaries, supplementary labour income and payment in kind.

(ii) Operating surplus: It is the income earned from the ownership and control of capital and is also known as income from property and entrepreneurship. Capital income includes interest, rent, profits, royalties, dividends and other similar incomes.

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