Question

Which of the following statements is TRUE about earned income and unearned income?

1) Earned income is how much you make from a job
2) Earned income is any money you make in interest, dividends, etc.
3) Unearned income is any money you make in interest, dividends, etc.
4) Unearned income is how much you make from a job

Answer 1

The correct statements are that 1)earned income is what one makes from a job, while unearned income includes money made from interest, dividends, and other investments.

Step-by-step explanation:

In the context of a market economy such as that of the United States, there are two main types of income: earned income and unearned income.

Earned income refers to the money one makes from a job, which includes wages, salaries, commissions, tips, and other forms of labor income.

This is the income earned by selling one's labor, depending on the number of work hours and the wage rate paid by the employer. On the other hand, unearned income is the money one makes from investments or ownership of assets.

Such as interest, dividends from stocks and bonds, or rental income from real estate. Therefore, concerning the student's question, the true statement is that earned income is how much you make from a job.