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Consider the following statements.
1. Out of private income, what finally reaches the households is known as personal disposable income and the amount that can be spent is the personal income
2. The government sector affects the personal income of households by making transfers and collecting taxes
3. This activity of the government can change the distribution of income, called as redistribution function
Which of these statements are not correct?
  • a)
    1 Only
  • b)
    2 Only
  • c)
    3 Only
  • d)
    1 and 2 Only
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Consider the following statements. 1. Out of private income, what fin...
  • Out of private income, what finally reaches the households is known as personal income and the amount that can be spent is the personal disposable income.
  • The government sector affects the personal disposable income of households by making transfers and collecting taxes.
  • It is through this that the government can change the distribution of income and bring about a distribution that is considered ‘fair’ by society. This is the redistribution function.
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Most Upvoted Answer
Consider the following statements. 1. Out of private income, what fin...
Explanation:

1. Personal Disposable Income vs Personal Income:
- Personal disposable income refers to the amount of income that households have after deducting all personal taxes from their personal income.
- Personal income, on the other hand, refers to the total income received by individuals or households before any deductions.
- Therefore, the statement that what finally reaches households is personal disposable income and the amount that can be spent is the personal income is incorrect. It should be the other way around.

2. Government Sector Impact on Personal Income:
- The government sector can affect the personal income of households through various means such as making transfers (e.g., social security benefits, unemployment benefits) and collecting taxes.
- Transfers increase the personal income of households, while taxes decrease it.
- Therefore, the statement that the government sector affects personal income by making transfers and collecting taxes is correct.

3. Redistribution Function:
- The government's activity of making transfers and collecting taxes can indeed change the distribution of income, which is known as the redistribution function.
- Through its fiscal policies, the government can redistribute income from one section of society to another to achieve equity and social welfare objectives.
- Therefore, the statement that this activity of the government can change the distribution of income is correct.

Therefore, the correct answer is option 'D' - 1 and 2 Only, as the first statement is inaccurate.
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Consider the following statements. 1. Out of private income, what finally reaches the households is known as personal disposable income and the amount that can be spent is the personal income2. The government sector affects the personal income of households by making transfers and collecting taxes3. This activity of the government can change the distribution of income, called as redistribution function Which of these statements are not correct?a) 1 Onlyb) 2 Onlyc) 3 Onlyd) 1 and 2 OnlyCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements. 1. Out of private income, what finally reaches the households is known as personal disposable income and the amount that can be spent is the personal income2. The government sector affects the personal income of households by making transfers and collecting taxes3. This activity of the government can change the distribution of income, called as redistribution function Which of these statements are not correct?a) 1 Onlyb) 2 Onlyc) 3 Onlyd) 1 and 2 OnlyCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. 1. Out of private income, what finally reaches the households is known as personal disposable income and the amount that can be spent is the personal income2. The government sector affects the personal income of households by making transfers and collecting taxes3. This activity of the government can change the distribution of income, called as redistribution function Which of these statements are not correct?a) 1 Onlyb) 2 Onlyc) 3 Onlyd) 1 and 2 OnlyCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. 1. Out of private income, what finally reaches the households is known as personal disposable income and the amount that can be spent is the personal income2. The government sector affects the personal income of households by making transfers and collecting taxes3. This activity of the government can change the distribution of income, called as redistribution function Which of these statements are not correct?a) 1 Onlyb) 2 Onlyc) 3 Onlyd) 1 and 2 OnlyCorrect answer is option 'D'. Can you explain this answer?.
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