National Income - Undistributed profits - Net interest payments made by households - Corporate tax + Transfer payments to the households from the government and firms, is

Personal Income.

The correct answer is Option (2) → Personal Income.

Personal Income (PI) refers to the total income actually received by households from all sources before paying direct taxes. It is derived from National Income (NI) by making certain adjustments:

Personal Income (PI) = National Income - Undistributed profits - Net interest payments made by households - Corporate tax + Transfer payments to the households from the government and firms