ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Passive income includes regular earnings from a source other than an employer or contractor. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends.

Detailed explanation-2: -Passive sources of income may include money generated from interest and dividends on investments, limited partnerships, and rental property. Likewise, salary, hourly wages, commissions, and tips are examples of active sources of revenue.

Detailed explanation-3: -Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.

Detailed explanation-4: -Passive income streams can come from investing in mutual funds or real estate, selling products online, publishing online courses, or other side hustles in which the earner doesn’t have to actively participate.