Question

Which of the following accurately describes how earnings from capital eventually get paid to households?

Question 17 1 pts Which of the following accurately describes how earnings from capital eventually get paid to households? Households can own a stock of capital and rent it to firms. O Households lend money to firms, who then pay interest to the households. Households that own stockin firms receive dividends. All of the above are correct.

Answer 1

Solution:

There are many ways in which households can get paid back the interests earned on capital. Households can lend money to firms for investment purpose, who can then pay back to the households (which is an informal way). They could also deposit money with the bank, who lend it to firms (an indirect formal way). Households can also own a stock of capital like building, factory, land, etc, and rent it to the firms. Lastly, households owning stock in firms receive dividends of the profit they earn.

Thus, all the mentioned statements are correct. So, the correct option is (d).