Which of the following statements concerning disposable or discretionary income is correct?
A) Discretionary income reflects one's take-home pay.
B) Disposable income is greater than discretionary income.
C) Disposable income is generally used to predict purchases of luxuries.
D) Unlike discretionary income, disposable income reflects the applicable inflation rate.

Question

Quizplus · Accepted Answer

Disposable income is the amount of money left after taxes are taken out, while discretionary income is the amount left after paying for necessities like food, utilities, and rent. Therefore, disposable income is greater than discretionary income because it includes money that could be spent on both necessities and non-essentials.

Which of the Following Statements Concerning Disposable or Discretionary Income