What are the two types of personal income?

• A. Fixed income and variable income
• B. Salary and bonuses
• C. Wages and tips
• D. Interest and dividends

Answer: (A)

Income can be viewed in terms of how predictable it is. There are two broad kinds: fixed income and variable income.

Fixed income is money you can expect regularly with little or no variation from period to period. Think salary, pensions, or Social Security benefits—these pay out the same (or very predictably) each pay period.

Variable income changes based on how much you work or how well you perform. Wages that depend on hours, tips, commissions, and overtime are common examples—and these can go up or down from paycheck to paycheck.

The idea of these two types best captures the overall structure of personal earnings, because it covers money that stays steady versus money that fluctuates. The other options point to specific forms of compensation or investment income, but they don’t describe the general two-category framework.