In the absence of indirect taxes and subsidies, the total value of the final goods output is distributed among the factors of production. Which of the following is the odd one out?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Saving of households
The value of final output is paid out to the factors of production: wages, interest, rent and profit. Saving is not a factor payment. It is the part of income that households do not consume.
NCERT (2026-27): “4.3.3 The Multiplier Mechanism … The production of final goods employs factors such as labour, capital, land and entrepreneurship. In the absence of indirect taxes or subsidies, the total value of the final goods output is distributed among different factors of production – wages to labour, interest to capital, rent to land etc. Whatever is left over is appropriated by the entrepreneur and is called profit.” |