<p>When we rent out our land to firm,they use that land to produce goods and services,so the money we earn is a factor income but my question is that when we rent out our land to people,who don't use it for that purpose does that mean that the money we earn is for a final service which can be broken down into factor income further. Another question that i have is doesn't the rent i get from either firms or individuals contain both the interest for capital and the rent for land. Is there a flaw in my argument or assumption</p>

CC BY-SA 4.0
2020-12-08T15:11:21.087Z
Good question! I don't know the answer for sure but for an authoritative answer you should see [System of National Accounts](https://unstats.un.org/unsd/nationalaccount/sna.asp). Broadly, I think rent paid by household is part of private *consumption* expenditure under housing, as it is a service *consumed* by households. For firms, rent paid is part (intermediate) cost and is not therefore a *final* good or service produced by the economy, and should therefore not be covered in GDP, at least directly,
Dayne
CC BY-SA 4.0
2020-12-08T18:09:51.420Z
The answer specifically hinges on whether you really mean renting land or whether you’re referring to what one usually (outside of farming) rents out, which is the use of a structure.
dismalscience
<macroeconomics><national-accounts><economic-measurement>
Is the rent we get from firms and households treated the same while calculating gdp
user31137
# Is the rent we get from firms and households treated the same while calculating gdp

(Asked by: username_0 on 2020-12-08)

When we rent out our land to firm,they use that land to produce goods and services,so the money we earn is a factor income but my question is that when we rent out our land to people,who don't use it for that purpose does that mean that the money we earn is for a final service which can be broken down into factor income further. Another question that i have is doesn't the rent i get from either firms or individuals contain both the interest for capital and the rent for land. Is there a flaw in my argument or assumption

**Tags:** macroeconomics, national-accounts, economic-measurement

> **Comments:**
> **username_1**: Good question! I don't know the answer for sure but for an authoritative answer you should see [System of National Accounts](https://unstats.un.org/unsd/nationalaccount/sna.asp). Broadly, I think rent paid by household is part of private *consumption* expenditure under housing, as it is a service *consumed* by households. For firms, rent paid is part (intermediate) cost and is not therefore a *final* good or service produced by the economy, and should therefore not be covered in GDP, at least directly,  
> **username_2**: The answer specifically hinges on whether you really mean renting land or whether you’re referring to what one usually (outside of farming) rents out, which is the use of a structure.  

---

## 0 answers

