Which of the following statement regarding income is correct?
I. Out of private income, what finally reaches the households is known as personal income.
II. The total national income of the country is composed of two parts private income and public income.
Show answer & explanation
Correct answer: C
Explanation
- In economics, personal income refers to the income that ultimately accrues to households or individuals.
- It is the income derived from private income after accounting for taxes and other adjustments.
- Households utilize this income for their consumption and savings.
- The second statement pertains to the composition of national income.
- A country's total national income is broadly categorized into private income and public income.
- Private income is associated with individuals and the private sector, whereas public income relates to the government.
- Therefore, both of the given statements are correct.