Income and spending
Income is the money a person receives in exchange for work or property. There are five basic types of income:
· employee compensation is the income earned by working for others.
· proprietor compensation is the income that self-employed people earn.
· corporation profit is the income corporations have left after paying all the expenses.
· interest is the money received by people and corporations for depositing their money in savings account or lending it to others.
· Rent is income from allowing others to use one’s property temporarily.
The total income is the sum of 5 basic types.
One other type of income is a transfer payment – money one person or group gives to another, though the receiver has not provided a specific good or service.
Now let speak about work people. By the type of work people do workers fall into one of four broad categories:
1. White-collar workers are people who do jobs in offices, such as secretaries, teachers.
2. Blue-collar workers are people who do jobs in factories or outdoors, such as carpenters and plumbers.
3. Service workers provide services to other individuals or businesses.
4. Farm workers are people who work on their own farms.
In the market system a person’s income is determined by how the market values that person’s resources and skills
Income is not the same as wealth. Wealth is any resource that can be used to produce income. At the end I have to say that spending becomes income for someone else.
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