Which of the following is added to National Income while computing Personal Income?

Correct option is A

Ans. (a)
Transfer payments are added to National Income when computing Personal Income, as they represent incomes received by individuals without any direct contribution to production (e.g., pensions, scholarships, and social welfare payments).
Information Booster
1. Personal Income = National Income – (Corporate Taxes + Undistributed Profits) + Transfer Payments.
2. Transfer payments are not included in National Income but are added when calculating Personal Income.
3. Social security contributions are subtracted from National Income.
4. Corporate taxes and undistributed profits are deducted because they do not reach individuals.
5. Personal Income reflects the actual disposable income available to households.
6. It is crucial for understanding consumer spending trends.