What is an economic income?
Economic income is a term used to describe the amount of income that the subject can comfortably spend over a specified time period and to be essentially the same financial situation at the end of the period as at the beginning. This type of income is sometimes referred to as excess both households and businesses create economic income and may decide to use this income in several different ways.
If the concept of economic intake is applied to the household budget, this term usually applies to the amount of income that remains after all the essentials of the period have been purchased. The foundations include items such as food, clothing and shelter, making minimal payments from out of outstanding loans and credit card accounts or handling any other permanent obligation that is due during periods. Once these basic life needs have been resolved for a period, the household can freely use any remaining income, as it considers appropriate.
Household can choose to do any number of things with economic income. Some may choose to take part of this income and place it in an interest account such as a savings account or deposit certificate. Others may decide to use excess as a way of buying items that are required, but do not necessarily need to operate the household. With both scenarios, spending this further income does not pose a threat to the stability of the household.
businesses use the same basic model in determining what is and is not an economic income. Any profits that persist after paying taxes, all expenses associated with the company's activities and other permanent obligations would be considered an economic income. These Could Funds to be used for anything from throwing the party for employees to the provision of charity gifts to the community.
It is important to realize that economic income may include realizedI and unrealized income. This means that any type of return on the investment that is earned during this period would be considered an economic income together with a net income obtained from employment. For example, if a monthly wage or salary that remains after paying taxes and coverage of all costs, it is $ 1,000 in the United States and the value of stocks owned households will increase by $ 120, then the household has an economic income per month of $ 1,220. This is true, even if the money obtained as interest on shares is still set to the investment account and will not be realized until the stock is sold.