Question

Compare the terms 'Personal income and National income'.

Answer 1

National Income at Factor Cost $\left(N{I}_{\left(FC\right)}\right)$ : It means the sum total of all income earned by resources or factor suppliers for their contribution of land, labour, capital and entrepreneurial ability which go into the year's net production.
$N{I}_{\left(FC\right)}=NN{P}_{\left(MP\right)}-IndirectTaxes+Subsidies$.
Personal Income (PI) : Personal Income can be defined as the sum of all kinds of incomes actually received by the individuals from all sources during a year. It includes wages and salaries, fees and commission, bonus, fringe benefits, rents, dividends, interest, earnings from self-employment. It also includes transfer incomes like pensions, unemployment allowances, social security benefits, gifts, etc. It includes all earned and unearned income.