The smallest component of national income is:
a. rent.
b. interest.
c. profits.
d. salaries and wages.

The smallest component of national income is salaries and wages.

Further explanation:

National income:

National income refers to the income of a country from all the three sectors of the economy in a year. These sectors are primary, secondary, and tertiary. The value of services and goods produced is calculated to find out the national income of an economy.  

In simple words, National income is the income of a whole country in a year.  

National income includes all the following components:

•Salaries and wages

•Rental income

•Interest

•Profits of organizations

•Indirect taxes

•Depreciation

Justification for the correct and incorrect

a.

Rent: This option is incorrect.

Rent is a component of national income but rent is treated as a large component of the national income, not the smallest component.

b.

Interest: This option is incorrect.

Interest is a component of national income, but it is not the smallest component of national income because interest constitutes a portion of national income which is big, not small.

c.

Profits: This option is incorrect.

Profits are the component of national income, but profits are not the smallest components of national income. The profits are the main income which is treated as a large part of the national income.  

d.

Salaries and wages: This option is correct.

Salaries and wages are the smallest components of national income. Salaries and wages are not treated as large components of national income. They constitute a small portion while calculating the national income.

Thus, salaries and wages are the smallest components of national income.

Learn more:

1.Gross National Product

2.Demand and supply of goods

3.Elasticity of demand

Answer details:

Grade: Middle School

Subject: Macroeconomics

Chapter: Fundamentals of macroeconomics  

Keywords: the smallest, component of, national income is, rent, interest, profits and salaries, and wages, country, indirect taxes, depreciation, economy.

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explanation:

saving account is right