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Personal Disposable income is equal to?

By BYJU'S Exam Prep

Updated on: September 25th, 2023

(A) Personal Income – Indirect taxes

(B) Personal Income – Direct taxes

(C) Consumption Expenditure + Savings

(D) Both Personal Income – Direct taxes and Consumption Expenditure + Savings

Personal Disposable income is equal to Both Personal Income – Direct taxes and Consumption Expenditure + Savings. To understand, it is important that you know about Personal Disposable income. Personal income is known as the money left after paying Income taxes.

What is Personal Disposable Income?

After deducting income taxes, the amount of money left over for household savings, consumption, and expenditure is referred to in economics as disposable income or disposable personal income. It is a significant measure that economists use to assess the level of economic demand. It is employed to gauge the overall health of the nation’s economy. We have mentioned a few points below to explain Personal Disposable Income.

  • Personal income less personal current taxes is referred to as disposable personal income in national accounts terminology.
  • The amount of money left over after all taxes have been paid is called as disposable income. Personal outlays can be subtracted to create personal (or private) savings.
  • It is determined for the economy of the nation as follows:

National Income + All the Indirect Taxes + Transfers from other Countries.

Summary:

Personal Disposable income is equal to? (A) Personal Income – Indirect taxes (B) Personal Income – Direct taxes (C) Consumption Expenditure + Savings (D) Both Personal Income – Direct taxes and Consumption Expenditure + Savings.

Personal Disposable Income is defined as the left amount after paying current income tax. As per the options available here, the correct option is the amount we have left after subtracting the total of Direct tax, consumption expenditure, and saving from the Personal income.

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