Asked Sep 24, 2019

Suppose GDP is $ 15 trillion, with $ 8 trillion coming from consumption, $ 2.5 trillion coming from gross investment, $ 3.5 trillion coming from government expenditures, and $ 1 trillion coming from net exports. Also suppose that across the whole economy, personal income is $ 12 trillion. If the government collects $ 1.5 trillion in personal taxes, then disposable income will be: 

a) $ 13.5 trillion

b) $ 12.0 trillion

c) $ 10.5 trillion

d) None of these are correct


Expert Answer

Step 1

The correct alternative for the aforementioned question is (C).

Step 2

In economics the term disposable income refers to the income that is left in the economy after subtracting personal tax from personal income or it is the income which is either saved or spend/consumed. There are...

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