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27 June, 22:39

Gross Investment 18

National Income 100

Net Exports 2

Personal income 85

Personal Consumption Expenditures 70

Saving 5

Government Purchases 20

Net Domestic Product 105

Statistical Discrepancy 0

Refer to the above data. Disposable income is:

a) $83.

b) $73.

c) $75.

d) $77

+5
Answers (1)
  1. 28 June, 01:49
    0
    c) $75.

    Explanation:

    The disposable income is the amount of personal income after taxes

    we can solve for taxs using the savings identity:

    Savings = Private Savings + Public Savings

    where:

    Private savings: personal income - personal consumption

    and Public Savings = taxes - government spending

    We plug the value in the formula and solve for T

    5 = 85 - 70 + T - 20

    5 = T - 5

    T = 10

    Now, we derive personal income:

    85 income - 10 taxes = 75 disposable income
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