Personal Disposable Income is?

1. The part of Aggregate Income which belongs to the household.
2. The part of Aggregate Income which belongs to the Government.
3. The part of Aggregate Income which belongs to the firm.
4. The part of Aggregate Income which belongs to the rest of the world.

Option 1 -> Personal Disposable Income refers to the income available to households after all direct taxes have been paid.

Option 2 -> Government receives income through taxes and other revenues, not personal disposable income.

Option 3 -> Firms have corporate profits and retained earnings, which are separate from personal disposable income.

Option 4 -> Rest of the world relates to net factor income from abroad, not personal disposable income.

Hence, Option 1: The part of Aggregate Income which belongs to the household -> Personal Disposable Income (PDI) is the income that remains with households after deducting direct taxes from personal income. It represents the actual purchasing power available to households, which they can either use for consumption expenditure or save for future use. Formula: PDI = Personal Income - Direct Taxes. This is a key macroeconomic indicator as it determines the consumption capacity of an economy-> correct