How To Calculate The Disposable Income And The Personal Income?

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Yun Wan Profile
Yun Wan answered
Disposable income is defined as the level of money that households have available for spending and saving after income tax has been deducted from their personal income. The level of personal income is often monitored as one of the many crucial indicators used to gauge the overall state of the economy.

Disposable income is important to households for several reasons. It is the money left after taxes for paying for mortgages, household bills and other regular outgoings. This money can also pay for essential travel and things like fixing cars and home maintenance. It is vital you have enough disposable income to pay your monthly home rental/mortgage bills or you can risk eviction from your home.

Discretionary income is what's left after your regular outgoings. This money can be used to treat yourself to a host of things from flights to holidays to new clothes or a new car. The amount of  disposable income and discretionary income you have depends on what salary you are taking home from the company you are working for, how much you pay in taxes and what your regular outgoings are. Be careful, as you do not want to overspend and leave yourself with no money to buy food to eat!
Talia Hudgens Profile
Talia Hudgens answered
NI = GDP + NR - IBT - CC
NI = National income
NR = + or - Net income from assets abroad (net income receipts)
IBT = Indirect business taxes
CC = Depreciation

NI = 4'000 + 0 - 210 - 500 = 3'290

NDP = GDP - CC
NDP = Net domestic product

NDP = 4'000 - 500 = 3'500

PI = NI - corporate taxes - retained earnings - social security + transfer payments + net interest
PI = Personal income

PI = 3'290 - 50 - 25 - 200 + 500 = 3'515

DI = PI - Personal taxes
DI = Disposable income

DI = 3'515 - 250 = 3'265
Anonymous Profile
Anonymous answered
Personal income is calculated by subtracting social security contributions, corporate income taxes, undistributed corporate profits and transfer payments from National income. While the Disposable income is calculated by subtracting personal taxes from the personal income.
Disposable Income And Personal Income
Philip Mohamed Kamara Profile
Philip Mohamed Kamara answered
Consider an economy with a firm owned by the government. Suppose that the firm purchases potatoes ($100) from the farmer, pays $80 to the worker, and the output (potato chips) has a total market value of $200. Suppose that there is no tax in this economy. It follows that the only source of government income are profit earned by the firm. Suppose that government consumption expenditure on potato chips is $40, the budget deficit is finance by public debt, which is $22. Suppose that there is no investment activity or transfer payment of any kind,and that no private borrowings occur. How much is private consumption ? How much is private savings?  How much is the interest payment from the government to the households? How would you calculate GDP by expenditure and income approach?
What is the personal income?

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