Final answer:
Personal income is true, as it represents the portion of GDP that goes directly into the hands of households. Disposable income is what remains after deducting taxes and adding government transfers. Personal income is the best measure of income available for spending.
Step-by-step explanation:
Personal income is true, it refers to the portion of GDP that goes directly into the hands of households. It closely corresponds to adjusted gross income on tax forms. On the other hand, disposable income is what remains after deducting taxes from personal income and adding government transfers received by households.
For example, if GDP increases by $100, we would expect personal income to increase by about $78, based on historical data where personal income was about 78 percent of GDP.
Therefore, personal income is the best measure of income households have available for spending.