In simple sense, income is defined as the flow of money or goods according to an individual or a group of individuals a firm or the economy over some period.
It may originate from the sale of productive services (as wages, interest, profit and rent).
Thus, income table can be presented as:
The term, ‘income’ is very important in economics, because all the types of income earned by households are spent on purchasing of all goods and services required for daily consumption. When money income is deflated by current price level, we get real income.
Hence, Real Income = Money Income /Current Price Level.
Some Concepts on Income:
(i) National Income:
In simple sense, it means sum total of money income earned by all is the citizens in a country during a particular year. However, in economics, national income defined as the total money value of all the final goods and services produced within a domestic territory of a country during a given financial year along with the net factor income from abroad minus depreciation.
(ii) Per capita Income:
It defined as the total national income divided by total population of a country during a particular year. It can be measured in both current year price level or base or constant year price level. It gives a rough idea about standard of living of a country.
(iii) Personal Income:
It is defined as the total national income minus undistributed corporate income plus transfer payments. If we deduct income tax from the personal income, we get personal disposable income.