Final answer:
Disposable income is the amount of money households have left after paying taxes and receiving government transfers from their personal income. It is used for saving, investing, and discretionary expenditures, and directly influences consumption behavior. A student's part-time job income in 2021 would contribute to their personal and thus disposable income.
Step-by-step explanation:
Disposable income refers to the amount of money that households have available after taxes have been paid and government transfers have been added to their personal income. In essence, it is the portion of income that is available for saving, investing, or spending after essential expenses such as taxes are accounted for. For example, if a household's personal income increased by $78, the disposable income would increase by about $61, assuming a marginal tax rate of 22 percent, which leaves the household with 78 percent of the personal income. Notably, any changes in disposable income can directly affect consumption spending, highlighting the close relationship between disposable income and consumption behavior.
The reference to the student's part-time job in 2021 simply indicates a source of their personal income. In turn, the student's disposable income would be derived from this personal income after accounting for taxes and transfers. With an understanding of disposable income, individuals can better manage their finances, create budgets, and plan for expenditures such as savings and discretionary spending.