The correct answer is PI - Personal tax payments - Non-tax payments. Explanation & Key Takeaways: • The part of National Income (NI) that is received by households is referred to as Personal Income (PI). • First, let us note that out of NI, which is earned by the firms and government enterprises, a part of the profit is not distributed among the factors of production. • This is called Undistributed Profits (UP). • We have to deduct UP from NI to arrive at PI since UP does not accrue to households. • Similarly, Corporate Tax, which is imposed on the earnings made by the firms, will also have to be deducted from the NI, since it does not accrue to the households. • On the other hand, the households do receive interest payments from private firms or the government on past loans advanced by them. • And households may have to pay interest to the firms and the government as well, in case they had borrowed money from either. • So we have to deduct the net interests paid by the households to the firms and government. • The households receive transfer payments from the government and firms (pensions, scholarships, prizes, for example) which have to be added to calculate the Personal Income of the households. • Thus, Personal Income (PI) = NI – Undistributed profits – Net interest payments made by households – Corporate tax + Transfer payments to the households from the government and firms. • However, even PI is not the income over which the households have a complete say. • They have to pay taxes from PI. If we deduct the Personal Tax Payments (income tax, for example) and Non-tax Payments (such as fines) from PI, we obtain what is known as Personal Disposable Income. • Thus Personal Disposable Income (PDI ) = PI – Personal tax payments – Non-tax payments. • Personal Disposable Income is part of the aggregate income which belongs to the households. • They may decide to consume a part of it and save the rest.