Answer to Question #308999 in Macroeconomics for Kinza Tariq

Question

4. Define the terms personal income and personal disposable income. Conceptually, how do these income measures differ from national income? Of what use are these measures?

Answer 1

Personal income is the total compensation from several sources collectively received by all individuals or households in a country while Disposable income is the amount of money that a person or household has to spend or save after income taxes are deducted. They differ from National income in that national income includes the gross domestic product, plus net receipts from abroad of compensation of employees, property income and net taxes less subsidies on production.