CSEET · Economic and Business Environment · National Income Accounting and Related Concepts
An economy reports National Income of Rs 2,000 crore. Undistributed profits are Rs 100 crore, corporate tax is Rs 60 crore, social security contributions are Rs 40 crore and transfer payments are Rs 150 crore. Personal income tax is Rs 190 crore. What is its Personal Disposable Income?
Personal Disposable Income is Rs 1,760 crore. Personal Income equals National Income less undistributed profits, corporate tax and social security contributions, plus transfer payments, giving Rs 1,950 crore. Deducting personal income tax of Rs 190 crore leaves Rs 1,760 crore.
- ARs 1,760 croreCorrect
- BRs 1,950 crore
- CRs 1,910 crore
- DRs 1,610 crore
Explanation
Personal Income = 2,000 - 100 - 60 - 40 + 150 = Rs 1,950 crore. Disposable income = 1,950 - 190 = Rs 1,760 crore. Rs 1,950 crore is Personal Income itself, ignoring personal tax; Rs 1,610 crore wrongly subtracts transfer payments.
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