What is personal income?

Solution

Personal income is the total income received by individuals and households from all sources before taxes. It includes various types of income such as: Wages and Salaries: The income individuals earn from their jobs. Rental Income: Income earned from renting out properties. Interest Income: Income received from investments such as savings accounts, bonds, and other interest-bearing accounts. Dividends: Income received from owning shares in companies. Transfer Payments: Payments received from the government such as social security benefits, unemployment benefits, and welfare payments. Proprietor’s Income: Income from self-employment and business ownership. Other Income: Any other sources of income that do not fall into the above categories. Personal income serves as a measure of the economic well-being of individuals and households and is used to assess the capacity of consumers to spend and save, which in turn impacts the overall economy.