Question

Suppose that there are 2 million inhabitants of a country in whichthe mean gross (before tax) income is $20,000 per year. Suppose that the mean individual pays taxesof $3000 per year. What is the total disposable income (gross income minus taxes) per year for thecountry as a whole?

Answer 1

total disposable income per year for a country as a whole is which is $34 billion

Explanation:

The gross income of an individual is the amount of money an individual earns before any of the deductions like taxes are made. Net income is the total income left after making the required deductions like taxes.

We are given;

total number of inhabitants: 2 million

Mean gross (Before tax) income is

$20000.

Taxes to be paid every year: $3000

Now, to find the total disposable income, we will use the formula;

Total disposable income = gross income (before tax) - taxes

Thus;

Total disposable income =

$20000 − $3000 = $17000.

Thus, the total disposable income per individual is $17000.

Therefore, the total disposable income per year for a country as a whole is given by; 2 million x $17000.

This gives us, total disposable income per year for a country as a whole is which is $34 billion