Suppose you are hired as a consultant to estimate the increase in consumer demand for automobiles for the coming year. Which measure of aggregate income would be most useful to you for this type of forecasting?

Question

Quizplus · Accepted Answer

Disposable income is the most useful measure of aggregate income for forecasting consumer demand for automobiles because it represents the amount of money individuals and households have left after paying taxes and necessary expenses, such as housing and food. This disposable income can be used to purchase durable goods, such as automobiles, and thus provides a better indication of consumer demand for such goods. GNP, GDP, GDP deflator, and NNP do not specifically take into account disposable income available to consumers.

Suppose You Are Hired as a Consultant to Estimate the Increase