Which of the following best defines disposable income?
A)income received by households less personal taxes
B)the before-tax income received by households
C)all income earned by resource suppliers for their current contributions to production
D)the market value of the annual output net of consumption of fixed capital

Question

Quizplus · Accepted Answer

Disposable income is the income that households have after paying their personal taxes. It is the amount of money that households have available for spending and saving. Therefore, option A - income received by households less personal taxes is the correct definition of disposable income. Option B is incorrect as it describes gross income, which is income before taxes. Option C describes national income, which is the total income earned by resource suppliers in the economy. Option D describes net national product (NNP), which is the market value of goods and services produced by an economy in a year, minus the value of the depreciated capital goods.

Which of the Following Best Defines Disposable Income