Question

Which of the following equalities is​ correct?

A.
Disposable income equals national income.
B.
Disposable income is equal to national income plus government transfer payments plus taxes.
C.
Government transfer payments minus taxes equals net taxes.
D.
Disposable income is equal to national income minus net taxes.

Answer 1

The correct equality is D. Disposable income is equal to national income minus net taxes.

Step-by-step explanation:

The correct equality is D. Disposable income is equal to national income minus net taxes. Disposable income is the income that remains after taxes have been paid and transfers received, and it measures the available resources for households. To calculate disposable income, we subtract net taxes (taxes paid minus transfers received) from national income. This equation reflects the definition and calculation of disposable income accurately.