Interest paid to bank for a crop loan is :
(A) Intermediate consumption
(B) A transfer payment
(C) A factor payment
(D) Capital formation
Correct Answer : A factor payment
Interest paid to a bank for a crop loan is a factor payment. Factor payment refers to a wage, interest, rent and profit payment of the services scarce resources, or the factors of productions (labor, capital, land, and entrepreneurship), in return for productive services.
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