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Question
Differentiate between personal and disposable income.
Solution
- Personal income:
Personal income is the total income received by the individuals of a country from all sources before payment of direct taxes in a year. - Disposable income:
Disposable Income is also known as Disposable personal income. It is the individuals income after the payment of income tax. This is the amount available for households for consumption.
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RELATED QUESTIONS
Explain the various methods of measuring national income.
Unpaid services are not included in national income.
Calculate National Income from the following data:
| S.No. | Particulars | Rs.in crores |
| (i) | Private final consumption expenditure | 900 |
| (ii) | Profit | 100 |
| (iii) | Government final consumption expenditure | 400 |
| (iv) | Net indirect taxes | 100 |
| (v) | Gross domestic capital formation | 250 |
| (vi) | Change in stock | 50 |
| (vii) | Net factor income from abroad | (-)40 |
| (viii) | Consumption of fixed capital | 20 |
| (ix) | Net imports | 30 |
Other things remaining unchanged, when in a country the price of foreign currency rises, national income is: (choose the correct alternative)
a. Likely to rise
b. Likely to fall
c. Likely to rise and fall both
d. Not affected
Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1500
Autonomous consumption expenditure = 300
Investment expenditure = 300
Explain national income determination through the two alternative approaches. Use Diagram.
Define or explain the following concept.
Induced Consumption expenditure.
(b) decreases
(c) becomes equal
(d) becomes zero
Explain the circular flow of national income.
Answer in detail:
Explain the 'Final Good Approach' to avoid double counting of goods and services in the estimation of national income.
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Gross national product and Gross domestic product.
Distinguish between:
Gross National Product and Net National Product
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National income at market prices and national income at factor cost
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Personal income and Disposable income
Explain briefly NNP at factor cost.
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Accounting of National Income at constant prices is known as ____________.
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