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CSS Micro Macro Economics P-I QUESTION #1684
Question 1
Disposable personal income is most accurately defined as the income that remains to households after:
  • Subtracting all savings from personal income
  • Setting aside funds exclusively for consumption expenditure
  • Deducting personal income taxes from personal income✔️
  • Excluding all government transfer payments such as social security
Correct Answer Explanation
Disposable personal income (DPI) = Personal income − Personal income taxes (direct taxes paid to the government). It represents the actual income available to households for spending (consumption) and saving. It is NOT the same as personal income (which is pre-tax) and is NOT restricted to consumption alone — households can also save their disposable income.