Asked by Kristen Buehler on Jul 22, 2024
Verified
Which of the following is true of disposable income?
A) It excludes transfer payments.
B) It is the portion of income that is used solely for consumption.
C) It is that part of total earned income that is paid to the government in the form of taxes.
D) It is the difference between income and saving.
E) It equals consumption expenditures plus saving.
Disposable Income
The total funds available to families for spending and saving after subtracting income tax.
Transfer Payments
Payments made by governments to individuals without any expectation of a good or service in return, such as welfare or unemployment benefits.
- Understand the connection between spending, savings, and net income.
Verified Answer
CF
Chloe FisherJul 22, 2024
Final Answer :
E
Explanation :
Disposable income is the income that households have available for spending and saving after taxes have been paid and transfer payments such as welfare or unemployment are received. Therefore, disposable income equals consumption expenditures plus saving.
Learning Objectives
- Understand the connection between spending, savings, and net income.