Passive income is appealing because it requires little to no effort to make money.

[lkjhg811]

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Source: Passive income is appealing because it requires little to no effort. Gatsby Investment can help you grow your money. | Gatsby Investment posted on the topic | LinkedIn

Which does "it" refer to? "passive income is appealing" or "to make money"?

 

[lingobingo]

It’s a badly written sentence, so not one that’s going to teach you anything worthwhile, in my view.

There’s some ambiguity, in that it’s possible to read the subordinate clause as one that uses it as a dummy subject:

it requires little to no effort to make money​

= making money requires little or no effort (if only! )​

But the intended meaning is clearly:

Passive income is appealing because it (= passive income) requires little to no effort to make money.​

​

However, income is money, so this statement doesn’t make a lot of sense. It would be better as:

​

Passive income is appealing because it involves little or no effort on your part. ​

 

[SevenDays]

Which does "it" refer to? "passive income is appealing" or "to make money"?

Well, there's a main clause and a subordinate clause linked by a subordinating conjunction. Let's put the clauses in brackets:

[Passive income is appealing] because [it requires little to no effort to make money]

In the subordinate clause, "it" doesn't refer to anything. It's a dummy subject, introduced by extraposition. Extraposition moves a heavy subject, such as an infinitive, to the back, and places dummy it at the front as the new grammatical subject:

to make money requires little to no effort ~
It requires little to no effort to make money

That's syntax. Now, in terms of semantics, "it" is in an anaphoric relationship with the subject of the main clause. In other words, "it" refers back to its antecedent "passive income." Thus, we can say

Passive income requires little to no effort to make money

 

[grassy]

In the subordinate clause, "it" doesn't refer to anything. It's a dummy subject, introduced by extraposition.

Now, in terms of semantics, "it" is in an anaphoric relationship with the subject of the main clause. In other words, "it" refers back to its antecedent "passive income."

I disagree that both of those readings are correct at the same time, if that's your point. I agree with with LB that reading 2 is the intended one.