● It is Personal Income which includes Transfer Payments . Hence, Option 3 is NOT correct. ◦ Personal income refers to the broad measure of household income. ◦ It measures the purchasing power of consumers. ◦ It consists of all the income either earned or unearned by households. ● Personal Income = National Income – Indirect business taxes – Corporate income taxes – Undistributed corporate profits + Transfer payments. Personal disposable income refers to personal income minus taxes at a personal level. ◦ It measures the amount of net income that remains after households pay all their tax levies. ◦ It also represents the amount households will spend on goods and services or will save to invest.