Question:
Personal income is:
Personal income is:
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Remember: "Personal Income = Income Received," whereas "Personal Disposable Income = Income available for spending (after tax deductions)."
Updated On: Aug 24, 2026
- The amount of income received by the household sector during a given year
- The amount of income households have available for spending during a given year
- National income less indirect taxes
- The sum of wages plus interest received by the household sector during a given year
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The Correct Option is A
Solution and Explanation
Step 1: Understanding the Concept:
National income accounting involves several closely related income aggregates, including National Income (NI), Personal Income (PI), and Personal Disposable Income (PDI).
Step 2: Detailed Explanation:
Let us distinguish between the different aggregates:
- Personal Income (PI): This is the total income actually received by individuals or households from all sources (including wages, salaries, transfer payments, and interest) before personal income taxes are deducted. (Option A)
- Personal Disposable Income (PDI): This is the actual amount available for spending or saving after individuals pay their personal taxes to the government. (Option B)
Therefore, Personal Income represents the total income received by the household sector.
Step 3: Final Answer:
The definition of personal income is the amount received by the household sector, corresponding to Option (A).
National income accounting involves several closely related income aggregates, including National Income (NI), Personal Income (PI), and Personal Disposable Income (PDI).
Step 2: Detailed Explanation:
Let us distinguish between the different aggregates:
- Personal Income (PI): This is the total income actually received by individuals or households from all sources (including wages, salaries, transfer payments, and interest) before personal income taxes are deducted. (Option A)
- Personal Disposable Income (PDI): This is the actual amount available for spending or saving after individuals pay their personal taxes to the government. (Option B)
Therefore, Personal Income represents the total income received by the household sector.
Step 3: Final Answer:
The definition of personal income is the amount received by the household sector, corresponding to Option (A).
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