In a typical year, which of the following measures of aggregate output and income is likely to be the smallest?
A) gross domestic product
B) national income
C) disposable income
D) personal income

Question

Quizplus · Accepted Answer

Disposable income is likely to be the smallest because it is equal to national income minus taxes and other transfers to the government, which reduces the amount of income available for consumption and saving. Therefore, it is typically lower than both gross domestic product and national income, which do not take taxes and transfers into account. Personal income, while also taking taxes and transfers into account, includes transfer payments such as social security and welfare, which are not included in disposable income.

In a Typical Year, Which of the Following Measures of Aggregate