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Disposable Income
Formula for Disposable Income
Disposable income is calculated by taking a household's or individual's market income, subtracting taxes paid, and adding any government transfers received. The relationship can be expressed with the formula: Disposable Income = Market Income − Taxes + Government Transfers.
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Economics
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Introduction to Macroeconomics Course
Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Market Income vs. Disposable Income for Measuring Living Standards
Formula for Disposable Income
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An individual earns a market income of 12,000 in taxes and receive $5,000 in government transfers. What is their disposable income for the year?
Calculating a Household's Financial Position
A household's market income remains constant from one year to the next, yet their disposable income increases. Which of the following scenarios would best explain this change?
Policy Effects on Household Spending Power
Comparing National Economic Well-being
If a government simultaneously increases both the taxes a household pays and the government transfers it receives by the exact same dollar amount, the household's disposable income will remain unchanged, assuming its market income does not change.
Calculating Market Income from Disposable Income
Match each component to its function within the calculation that determines the amount of money a household has available for spending and saving.
Two households, Household A and Household B, earn the same market income. Despite this, Household A has a higher disposable income than Household B. Which statement must be true to explain this situation?
To calculate the amount of money a household has available for spending and saving, one must subtract taxes from market income and add any received ________.