In a macroeconomy, National Income is measured at \text{₦1,200 million}. Economic records … — JAMB UTME

In a macroeconomy, National Income is measured at $\text{₦1,200 million}$ . Economic records show social security contributions of $\text{₦85 million}$ , corporate profit taxes of $\text{₦120 million}$ , undistributed corporate profits of $\text{��95 million}$ , and government transfer payments of $\text{₦150 million}$ . Calculate the total Personal Income of the economy in millions of Naira.

Answer: 1050 million Naira

Answer

The total Personal Income is 1050 million Naira.

Personal Income is calculated by adjusting National Income: subtracting corporate profit taxes, undistributed corporate profits, and social security contributions, while adding government transfer payments. Thus,

\text{Personal Income} = 1200 - (85 + 120 + 95) + 150 = 1050

million Naira.

Step-by-Step Solution

Calculate total deductions from National Income

300 million Naira

Social security contributions, corporate profit taxes, and undistributed profits represent earned income that households do not directly receive.

Adjust National Income by subtracting deductions and adding transfer payments

1050 million Naira

Transfer payments (such as pensions and welfare) are received by individuals without rendering immediate productive services, so they are added to determine total Personal Income.

Key Concept

Derivation of Personal Income from National Income

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