Use the following to answer questions:
-(Figure 7-2: Expanded Circular-Flow Model) Use Figure 7-2: Expanded Circular-Flow Model. What is the value of disposable income?
A) $1,020
B) $1,000
C) $870
D) $850

Question

Use the following to answer questions: 
-(Figure 7-2: Expanded Circular-Flow Model) Use Figure 7-2: Expanded Circular-Flow Model. What is the value of disposable income?
A) $1,020 
B) $1,000 
C) $870 
D) $850

Quizplus · Accepted Answer

Disposable income is calculated by taking national income and subtracting taxes, then adding transfer payments. In this scenario, if the national income is $1,000, taxes are $200, and transfer payments are $70, the disposable income would be $1,000 - $200 + $70 = $870.

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