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

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