Disposable personal income:
A) is computed by subtracting personal tax from personal income.
B) is generally greater than personal income.
C) includes corporate profits but not dividends.
D) does not include government transfers to individuals.

Question

Quizplus · Accepted Answer

Disposable personal income is the income remaining after individuals have paid their personal taxes. Therefore, it is computed by subtracting personal tax from personal income. Choice B is incorrect because disposable personal income is generally less than personal income, as taxes are deducted from personal income. Choice C is incorrect because disposable personal income only includes income received by individuals, not corporations. Choice D is incorrect because government transfers, such as social security and welfare payments, are included in disposable personal income.

Disposable Personal Income