2018 · Q107
In National Income (NI) accounts, Personal Income (PI) is defined as
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- ANI − undistributed profits – net interest payments made by households – corporate tax + transfer payments to the households from the government and firms
- BNI − undistributed profits – corporate tax + transfer payments to the households from the government and firms
- Cundistributed profits – net interest payments made by households + transfer payments to the households from the government and firms
- Dundistributed profits – net interest payments made by households – corporate tax
Explanation
Personal Income is what households actually receive: start from National Income and subtract incomes earned but not received — corporate taxes and undistributed (retained) profits — and net interest payments made by households, then add incomes received but not earned, i.e. transfer payments from the government and firms. That is exactly option A. Option B omits the household-interest adjustment, and C and D are not even anchored on NI. Hence A.