What type of income is typically associated with earnings from investments or property?

Study for the IGCSE Economics Test. Dive into multiple choice questions and informative flashcards, each with hints and clear explanations. Boost your exam readiness!

The correct answer is unearned income. This type of income is generated from sources other than employment. Examples include interest, dividends, rents from property, and capital gains from investments. Since unearned income arises from investing money or owning assets rather than actively working in a job, it is distinctly different from earned income, which refers to wages or salaries received for work performed.

Understanding the distinctions between these types of income is crucial. Earned income is typically directly linked to effort or labor, while unearned income reflects returns on investments and property ownership, which do not require ongoing labor. This division helps in analyzing personal financial strategies and economic policies related to savings, wealth accumulation, and taxation.

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