Which of the following is true of the disposable income of the households?
A)An increase in the average price level lowers the disposable income of the households.
B)Disposable income refers to the purchasing power of nominal income.
C)Increase in direct taxes will lower disposable income.
D)Decrease in government transfers will increase disposable income.
E)Disposable income refers to the net private transfers of the household sector.

Question

Quizplus · Accepted Answer

Direct taxes are taxes that are directly imposed on individuals, such as income tax. An increase in direct taxes will lower disposable income, as individuals will have less money available for spending after taxes are deducted from their income.

Which of the Following Is True of the Disposable Income