{"id":90304,"date":"2025-06-01T10:24:58","date_gmt":"2025-06-01T10:24:58","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=90304"},"modified":"2025-06-01T10:24:58","modified_gmt":"2025-06-01T10:24:58","slug":"in-national-income-ni-accounts-personal-income-pi-is-defined-as","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/","title":{"rendered":"In National Income (NI) accounts, Personal Income (PI) is defined as"},"content":{"rendered":"

In National Income (NI) accounts, Personal Income (PI) is defined as<\/p>\n

[amp_mcq option1=”NI – undistributed profits – net interest payments made by households – corporate tax + transfer payments to the households from the government and firms” option2=”NI – undistributed profits – corporate tax + transfer payments to the households from the government and firms” option3=”undistributed profits – net interest payments made by households + transfer payments to the households from the government and firms” option4=”undistributed profits – net interest payments made by households – corporate tax” correct=”option2″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC CAPF – 2018<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nThe correct answer is B) NI – undistributed profits – corporate tax + transfer payments to the households from the government and firms.
\n<\/section>\n
\nPersonal Income (PI) is the income received by households and non-profit institutions serving households before the payment of personal income taxes. It is derived from National Income (NI) by subtracting components of NI that are not received by households and adding income received by households that is not earned in the current production process (transfer payments). The standard formula is approximately: PI = NI – Corporate Income Tax – Undistributed Corporate Profits – Social Security Contributions + Transfer Payments. Option B closely matches this formula, excluding Social Security Contributions, which may not be included in all simplified representations or options. Option A includes “net interest payments made by households” as a subtraction, which is not standard in deriving PI from NI; interest paid by households is a disposition of income, not a deduction from earned income components of NI.
\n<\/section>\n
\nNational Income is the total income earned by the factors of production in a country during a period. Personal Income represents the actual income available to individuals and households before direct taxes. Disposable Personal Income is PI minus personal income taxes.
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

In National Income (NI) accounts, Personal Income (PI) is defined as [amp_mcq option1=”NI – undistributed profits – net interest payments made by households – corporate tax + transfer payments to the households from the government and firms” option2=”NI – undistributed profits – corporate tax + transfer payments to the households from the government and firms” … <\/p>\n

Detailed SolutionIn National Income (NI) accounts, Personal Income (PI) is defined as<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1085],"tags":[1114,1120,1174],"class_list":["post-90304","post","type-post","status-publish","format-standard","hentry","category-upsc-capf","tag-1114","tag-economic-development","tag-national-income-gross-domestic-product","no-featured-image-padding"],"yoast_head":"\nIn National Income (NI) accounts, Personal Income (PI) is defined as<\/title>\n<meta name=\"description\" content=\"The correct answer is B) NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms. Personal Income (PI) is the income received by households and non-profit institutions serving households before the payment of personal income taxes. It is derived from National Income (NI) by subtracting components of NI that are not received by households and adding income received by households that is not earned in the current production process (transfer payments). The standard formula is approximately: PI = NI - Corporate Income Tax - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments. Option B closely matches this formula, excluding Social Security Contributions, which may not be included in all simplified representations or options. Option A includes "net interest payments made by households" as a subtraction, which is not standard in deriving PI from NI; interest paid by households is a disposition of income, not a deduction from earned income components of NI.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In National Income (NI) accounts, Personal Income (PI) is defined as\" \/>\n<meta property=\"og:description\" content=\"The correct answer is B) NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms. Personal Income (PI) is the income received by households and non-profit institutions serving households before the payment of personal income taxes. It is derived from National Income (NI) by subtracting components of NI that are not received by households and adding income received by households that is not earned in the current production process (transfer payments). The standard formula is approximately: PI = NI - Corporate Income Tax - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments. Option B closely matches this formula, excluding Social Security Contributions, which may not be included in all simplified representations or options. Option A includes "net interest payments made by households" as a subtraction, which is not standard in deriving PI from NI; interest paid by households is a disposition of income, not a deduction from earned income components of NI.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T10:24:58+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"In National Income (NI) accounts, Personal Income (PI) is defined as","description":"The correct answer is B) NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms. Personal Income (PI) is the income received by households and non-profit institutions serving households before the payment of personal income taxes. It is derived from National Income (NI) by subtracting components of NI that are not received by households and adding income received by households that is not earned in the current production process (transfer payments). The standard formula is approximately: PI = NI - Corporate Income Tax - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments. Option B closely matches this formula, excluding Social Security Contributions, which may not be included in all simplified representations or options. Option A includes \"net interest payments made by households\" as a subtraction, which is not standard in deriving PI from NI; interest paid by households is a disposition of income, not a deduction from earned income components of NI.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/","og_locale":"en_US","og_type":"article","og_title":"In National Income (NI) accounts, Personal Income (PI) is defined as","og_description":"The correct answer is B) NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms. Personal Income (PI) is the income received by households and non-profit institutions serving households before the payment of personal income taxes. It is derived from National Income (NI) by subtracting components of NI that are not received by households and adding income received by households that is not earned in the current production process (transfer payments). The standard formula is approximately: PI = NI - Corporate Income Tax - Undistributed Corporate Profits - Social Security Contributions + Transfer Payments. Option B closely matches this formula, excluding Social Security Contributions, which may not be included in all simplified representations or options. Option A includes \"net interest payments made by households\" as a subtraction, which is not standard in deriving PI from NI; interest paid by households is a disposition of income, not a deduction from earned income components of NI.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T10:24:58+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/","url":"https:\/\/exam.pscnotes.com\/mcq\/in-national-income-ni-accounts-personal-income-pi-is-defined-as\/","name":"In National Income (NI) accounts, Personal Income (PI) is defined as","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T10:24:58+00:00","dateModified":"2025-06-01T10:24:58+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"The correct answer is B) NI - undistributed profits - corporate tax + transfer payments to the households from the government and firms. 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