A household earns money in three ways:
(A) it leases out a piece of land to a farmer
(B) it lends money to a firm
(C) one member works in a government department
As per NCERT, the incomes from (A), (B) and (C) are, in that order:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rent, interest and salary
Leasing out land earns rent. Lending money to a firm earns interest. Working in a government department earns a salary.
Profit goes to the owners of firms, and wages are earned by working in firms; neither fits these three incomes.
NCERT (2026-27): “1.2 Context of the Present Book of Macroeconomics … We must remember that the households consist of people. These people work in firms as workers and earn wages. They are the ones who work in the government departments and earn salaries, or they are the owners of firms and earn profits. Indeed the market in which the firms sell their products could not have been functioning without the demand coming from the households. Moreover, they can also earn rent by leasing land or earn interest by lending capital.” |