To calculate personal income from national income, the Bureau of Economic Analysis (BEA) must perform several adjustments to the national income data. Here's a step-by-step breakdown of the process:#### Solution By Steps***Step 1: Subtract Undistributed Corporate Profits***Undistributed corporate profits refer to the earnings of corporations that are not paid out as dividends to shareholders. Since these profits do not directly contribute to personal income, they must be subtracted from national income.***Step 2: Add Transfer Payments***Transfer payments are benefits paid by the government to individuals, such as Social Security, unemployment benefits, and welfare. These payments are not earned as part of national income but are a significant component of personal income. Therefore, they must be added.***Step 3: Subtract Corporate Taxes and Contributions for Social Insurance***Corporate taxes and contributions for social insurance are paid by businesses and are part of national income but do not directly contribute to personal income. These must be subtracted.***Step 4: Add Personal Interest Income***Personal interest income includes interest received by individuals from various sources, such as savings accounts and bonds. This income is part of personal income but is not included in national income and thus must be added.***Step 5: Add Dividends***Dividends are payments made by corporations to their shareholders out of their profits. These payments are a direct component of personal income and must be added to the national income to calculate personal income.#### Final AnswerTo calculate personal income from national income, the BEA must subtract undistributed corporate profits, corporate taxes, and contributions for social insurance; add transfer payments, personal interest income, and dividends.
