Income and Wealth

 





Income

In simple words, Income is the amount or reward, which someone receives for his personal services or the services of his property. There are different sorts of incomes and people receive incomes from various sources. It should originate from the sale of productive services like wages from firm, interest from bank, take advantage of business and rent from property.


For example if a shopkeeper selling goods in his shop for the time of one month and he received a particular amount after selling for one month, the overall amount might not be called income. All the expenditure of the shop like rent of the shop, salary of salesman, electricity bill, all the taxes, and maintenance of the shop needs to be deducted from the entire sells. The remaining amount may be called income of the shop.


Income is divided into two parts, earned income and unearned income.

1) Earned income: The money paid to people for the work they are doing is named earned income. Like a salary of salesman and wages of electrician.


2) Unearned income: The money gained from owning assets or wealth. For example; rent of the shop, hotel or land.


National Income


The sum of annual income of all the citizens in a country is named national income. We all know that income is generated only goods and services are produced. The worth of goods produced and total incomes of the persons who in any way help within the production of those goods are always equal. So we are able to define in another way. National income is that the total money value of all final goods and services produced in a country during one year along with the net factor income from abroad minus depreciation.

Transfer of Payments

In economics if an individual receives any amount of payment without providing any service is named transfer of payment. For example; charity, gifts, pension, relieve package, and unemployment allowance are transfer of payments.

Wealth

The aggregate value of everything the person owns that can be exchanged for money, goods or services are called wealth or all those things, which do not seem to be free and utilized by the people. In ordinary language, wealth means money, gold, silver or jewelry, but in economics wealth includes all things like property, Business, money, jewelry, furniture etc.


Wealth has these three characteristics


1) Utility: Utility means the ability of a good to satisfy a person's want. People attempt to get various goods only because they need utility. For example; a personal car has utility so it is wealth, but the utilization of taxi or rent a car which has no utility for men so it is not wealth.

2) Scarcity: The good which is on the market limited quantities. For example; diamonds, dry fruits, petrol etc.

3) Transferable: Only those goods are included in wealth which might be transferred from one person to another or is exchanged with other good.


Kinds of Wealth

1) Individual Wealth: All the material things which an individual own. Like property, jewelry, furniture, car etc.

2) Public Wealth: The assets created for the benefit of the overall public and are the common property of the entire society is public wealth. Like government buildings, roads, railways, public parks etc.

3) National Wealth: The natural resources of a country which a country own. Like minerals, forests, water etc.

4) International Wealth: All such goods or natural resources which jointly belong to any or all mankind and which might be utilized by all countries, like oceans, space, glaciers etc.

 


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