Macro

National Income

Medium

What is required to be subtracted from personal income in order to obtain personal disposable income?

Net current transfers by the government to the households.

Net remittances received by households from rest of the world.

Net tax payments by the households.

Nothing is to be subtracted as personal income is same as personal disposable income.

✅ Correct Option: 3

Option 1 -> Net current transfers are received by households from the government (like subsidies, pensions), so they are added to income, not subtracted.

Option 2 -> Net remittances from rest of the world are inflows to households, so they are added to income, not subtracted.

Option 3 -> Net tax payments by households (direct taxes like income tax) must be deducted from personal income to arrive at disposable income.

Option 4 -> Personal income and personal disposable income are different concepts; taxes create the difference between them.

Hence, Option 3: Net tax payments by the households -> Personal Disposable Income represents the actual income available to households for consumption and saving after paying direct taxes. The formula is: Personal Disposable Income = Personal Income - Direct Taxes (Net Tax Payments). Direct taxes include income tax, wealth tax, and other taxes paid directly by households to the government. This disposable income is what households can actually spend or save. -> correct

2026: 15 May Shift 1

Identify the steps in sequence to calculate the value of National Income by expenditure method:

A. Calculating NNP at factor cost ( $NNP_{fc} = NDP_{fc} + NFIA$ )

B. Calculating GDP at factor cost ( $GDP_{fc} = GDP_{mp} - NIT$ )

C. Calculating GDP at market price ( $GDP_{mp} = C + I + G + X - M$ )

D. Calculating NDP at factor cost ( $NDP_{fc} = GDP_{fc} - Depreciation$ )

Choose the correct answer from the options given below:

2025: 27 May Shift 2

An annual allowance for wear and tear of capital goods is defined as?

2025: 14 May Shift 1

What are the main sources of demand in a closed economy?

Consumption, government spending, and domestic investment
Consumption, net exports and government spending
Consumption, government spending, domestic investment and net exports
Government spending, net exports and domestic investment

2025: 26 May Shift 2

The value of the nominal GNP of an economy was Rs 5000 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 6000 crores. What is the value of the GNP deflator of the year.

2025: 28 May Shift 2

A firm produces Rs 1000 worth of goods per year. Rs 200 is the value of intermediate goods used by it during the year and Rs 100 is the value of capital consumption. What is the net value of total production?

2024: 16 May

Nominal Interest Rate =

What is required to be subtracted from personal income in order to obtain personal disposable income?

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)