What is the formula to determine Disposable Income from the given data? A) Personal Income minus transfer payments B) Personal Income plus direct taxes C) National Income minus per... What is the formula to determine Disposable Income from the given data? A) Personal Income minus transfer payments B) Personal Income plus direct taxes C) National Income minus personal taxes D) National Income plus subsidies
Understand the Problem
The question is asking for the formula that accurately calculates Disposable Income based on the options provided. Disposable Income is typically defined as the amount of money available to an individual or household after income taxes have been subtracted from personal income. Therefore, we need to identify the correct option that aligns with this definition.
Answer
Personal Income minus personal taxes.
The correct formula to determine disposable income is 'Personal Income minus personal taxes'.
Answer for screen readers
The correct formula to determine disposable income is 'Personal Income minus personal taxes'.
More Information
Disposable income is the amount of money that households have available for spending and saving after income taxes have been accounted for. It is a crucial indicator of consumer spending and economic health.
Tips
A common mistake is confusing disposable income with national income or personal income before taxes. Always ensure to subtract personal taxes from personal income to get the correct figure for disposable income.
Sources
- What is Disposable Personal Income? - Bureau of Economic Analysis - bea.gov
- Measuring the Economy - Harper College - .harpercollege.edu
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