Question

Differentiate between:

‘National Disposable Income’ and ‘Personal Disposable Income’.

Answer 1

	National Disposable Income	Personal Disposable Income
1.	National Disposable Income is the total income available to the nation for spending and saving.	Personal Disposable Income is the income available to individuals after paying direct taxes.
2.	It includes the income of the entire economy, including the government and private sectors.	It includes only the income of households and non-corporate entities.
3.	It is calculated by adding Net National Product at market prices and net current transfers from abroad.	It is calculated by deducting direct taxes and other payments from personal income.
4.	It reflects the nation’s capacity to spend on final consumption and saving.	It reflects an individual’s actual purchasing power for consumption and saving.
5.	It includes income before the deduction of direct taxes from individuals.	It excludes income paid as direct taxes by individuals to the government.