Q. In National Income (NI) accounts, Personal Income (PI) is defined as

[A] NI - undistributed profits – net interest payments made by households - corporate tax + transfer payments to the households from the government and firms

[B] NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms

[C] undistributed profits - net interest payments made by households + transfer payments to the households from the government and firms

[D] undistributed profits – net interest payments made by households - corporate tax

Answer: A
Notes:

National income is a broader national level economic measure than is personal income. National income includes payments to individuals (income from wages and salaries, and other income), plus payments to government (taxes), plus retained income from the corporate sector (depreciation, undistributed profits), less adjustments (subsidies, government and consumer interest, and statistical discrepancy).

Personal income measures national level income to persons and nonprofit corporations. Personal income includes payments to individuals (income from wages and salaries, and other income), plus transfer payments from government, less employee social insurance contributions.

Disposable personal income measures the after-tax income of persons and nonprofit corporations. It is calculated by subtracting personal tax and nontax payments from personal income. In 1999, disposable personal income represented approximately 72 percent of gross domestic product (i.e., total U.S. output).

Source: ForumIAS

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