In National Income [Nl) accounts, Personal Income (PI) is defined as

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Q: 107 (CAPF/2018)
In National Income [Nl) accounts, Personal Income (PI) is defined as

question_subject: 

Economics

question_exam: 

CAPF

stats: 

0,37,31,37,18,7,6

keywords: 

{'national income': [0, 2, 2, 4], 'personal income': [0, 0, 1, 3], 'net interest payments': [0, 0, 0, 1], 'corporate tax': [0, 0, 0, 1], 'households': [0, 1, 2, 7], 'transfer payments': [0, 0, 0, 1], 'profits': [0, 0, 1, 3], 'pi': [0, 0, 1, 3], 'ni': [0, 0, 0, 2], 'accounts': [2, 0, 5, 9], 'government': [5, 0, 0, 1]}

Option 1 states that Personal Income (PI) in National Income (NI) accounts is calculated by subtracting undistributed profits, net interest payments made by households, and corporate tax from NI, and then adding transfer payments made to households from the government and firms. This option correctly defines PI in terms of its components.

Option 2 states that PI is calculated by subtracting undistributed profits and corporate tax from NI, and then adding transfer payments made to households from the government and firms. This option does not consider the net interest payments made by households, which is an incorrect representation of PI.

Option 3 states that PI is calculated by subtracting undistributed profits and net interest payments made by households from NI, and then adding transfer payments made to households from the government and firms. This option also does not consider corporate tax, which is another incorrect representation of PI.

Option 4 states that PI is calculated by subtracting undistributed profits, net interest payments made by households, and corporate tax from NI. This option does not take into account the transfer payments made to households from the government and firms, which is an incorrect representation of PI.

Therefore, the correct answer is option 1 as it provides the accurate definition of PI in the context of NI accounts.

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