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What five categories of income make up national income?
Wages and salaries, income of self employed individuals, rental income, corporate profits, and interest on savings and other investments
What is money you earn called?
The money you earn is commonly referred to as "income." This can come from various sources, including wages from employment, profits from business activities, or returns on investments. Income is typically classified into categories such as earned income (from work) and unearned income (from investments or other sources).
What factors will shift the supply and demand for currency?
Confidence in the economy. If the economy of the country is doing good, it is likely that the confidence in that currency is high, raising the demand. However, when the economy is sloppy, the lack of confidence brings down the demand level. Level of exports and imports Relative income changes (Higher income in other countries => go on holidays and thus rising demand for other currencies.) Relative interest rate (High interest rate => high return => people invest more in it)
How does inflation affect the balance of payments?
Inflation affects low income earners more than high income earners. This is because low income earners' income tends not to rise as quickly as prices, therefore, their purchasing power decreases. Also, low income earners do not have the skills to demand higher wages. It should be noted that high inflation generally leads to interest rate increases. This affects low income earners' cost of living and compounds the other affects of inflation. So, inflation decreases purchasing power of low income earners relative to high income earners, whose income increase as quick as inflation. Ultimately, income distribution becomes less equal.
What is the difference between the substitution effect and the income effect in economics?
The substitution effect in economics refers to the change in consumption patterns due to a change in relative prices, where consumers switch to a cheaper alternative when the price of a good increases. The income effect, on the other hand, relates to the change in consumption patterns resulting from a change in purchasing power, where consumers buy more of a good when their income increases.
How does dividends affect net income?
Answer:Dividends are a distribution of net income. That means dividends is not included in the calculation of net income. Dividend payments do affect net income indirectly. If a company pays a dividend, cash is reduced. This cash can no longer be used to generate profits. That is why 'cash cow' companies pay out the bulk of their profits as dividends (few or no new investment opportunities available) and growth firms retain all profits.
What five categories of income make up national income?
Wages and salaries, income of self employed individuals, rental income, corporate profits, and interest on savings and other investments
What is the difference between absolute income and relative income?
Relative income measures your income in relation to other members of society, weighing it against the standards of the day. Absolute income, meanwhile, does not take into consideration those other factors, but simply reflects the total amount of earnings you have received in a given period.
What taxes do business owners pay on their profits and income?
Business owners typically pay income tax on their profits and income. Additionally, they may also be subject to self-employment tax, payroll taxes, and other business-related taxes depending on the type of business structure they have.
How does the goodwill affect net income?
Goodwill is the value of reputation of a irm in respect of the profits expected in future over and above the normal rate of return, which other companies can earn. Over and above the normal rate implies that the firms capability to earn more profits when compared to other firms because of its good brand name, locational advantage, good customer relations or possession of a unique patent right. The impact of goodwill on the net income is that, as good will is amortized the amount of profits get reduced. This further reduces the balacne of reserves and surplus amt in the balance sheet.
Do the balance sheet accounts or income statement figures seem to be primarily responsible for the low profits?
The Income Statement is the financial report that calculates net income (profits) so that is one place to look for the reason behind low profits. However, if the company doesn't have enough cash or other resources or it has too much debt, it could cause them to miss opportunities for sales or for financing to get the necessary resources. The structure of the income statement is: + Revenue - Costs of Goods Sold (direct cost of the product sold above) ___________________ = Gross Profit - Operating Expenses (related to usual costs of running of business) _____________________ = Operating Profit + Other Income (gains on sale of assets or other unusual "money in") - Other Expenses (losses on sale of assets or other unusual "money out") ______________________ Net Profit (Income)
What is money you earn called?
The money you earn is commonly referred to as "income." This can come from various sources, including wages from employment, profits from business activities, or returns on investments. Income is typically classified into categories such as earned income (from work) and unearned income (from investments or other sources).
What are the different types of income that individuals can earn?
Individuals can earn different types of income, including wages from employment, profits from business activities, interest from savings or investments, and dividends from owning stocks or other investments.
In a HUF if the Karta has income from salary will his salary income be treated as the salary income or an income for HUF?
Which income is regarded as HUF income?There are five heads of income:1. Salary2. Profits from business or profession3. Income from house property4. Capital gains5. Income from other sourcesSince the HUF is a separate entity, it can earn income from all the above except income from salary.All income that arises on the investment of the HUF's funds and utilisation of its assets is regarded as income and is separately assessed and taxed.
What is considered income on your income tax returns?
Gross income. General definition. Gross income means all income from whatever source derived unless excluded by law. Section 22 GROSS INCOME: (a): Gross income includes* gains, profits, and income derived from salaries, wages, or compensation for personal service...
What is Relative Income Hypothesis?
(1949) Proposed by JAMES STEMBLE DUESENBERRY (1918- ) but subsequently overtaken by other studies on the behavior of saving and consumption, relative income hypothesis states that an individual's attitude to consumption and saving is guided more by his income in relation to others than by an abstract standard of living. 'Keeping up with the Joneses' may be a more powerful incentive than the pursuit of wealth for its own sake.
Is capital gains considered earned income?
No, capital gains are not considered earned income. Earned income typically refers to wages, salaries, and bonuses earned from working, while capital gains are profits made from the sale of assets such as stocks, real estate, or other investments.
