Personal Income minus Direct Taxes equals:
Options
ANational Income
BDisposable Personal Income
CPrivate Income
DPer Capita Income
For any discrepancies in this question, email contact@cadada.in
Determination of National IncomePYQ - Nov 2020 (Inter)Question 105 of 20
All Questions Correct Answer
✅ Option b — Disposable Personal Income
All Options:
- ANational Income
- BDisposable Personal Income
- CPrivate Income
- DPer Capita Income
Detailed Solution & Explanation
To understand the concept, let's break it down into steps:
• Personal Income refers to the total income received by individuals in an economy, including wages, salaries, and other income.
• Direct Taxes are taxes levied directly on individuals, such as income tax, and are deducted from their income.
• When we subtract Direct Taxes from Personal Income, we get the amount of money that individuals have available to spend or save, which is known as Disposable Personal Income.
This concept is important in business economics as it helps us understand the amount of money available for consumption and savings, which in turn affects the overall demand in an economy.
The correct answer is right because it accurately reflects the definition of Disposable Personal Income, which is a key concept in macroeconomics.
Options like National Income and Private Income are incorrect because they refer to different economic concepts, with National Income being the total income earned by a country and Private Income being the income earned by the private sector, which may not necessarily be the same as Personal Income minus Direct Taxes.
About This Chapter: National Income
Paper
Paper 4: Business Economics
Weightage
15%
Key Topics
Aggregates, Measurement, Keynesian Theory
A crucial chapter covering national income aggregates like GDP, GNP, NDP, NNP, and the methods of measuring national income (Income, Expenditure, and Output methods). It also introduces Keynesian Theory including the concepts of Aggregate Demand, Consumption Function, and the Multiplier.
View Official ICAI SyllabusExam Strategy Tip
Practice numerical questions on GDP/GNP calculations and the Multiplier. These are guaranteed marks in every exam. Also understand the circular flow of income clearly.
More Questions from Determination of National Income
If MPC is 0.8, the value of the investment multiplier is:
Depreciation is also known as:
National Income usually refers to:
In a two-sector economy, Aggregate Demand equals:
Which method is also known as the "Value Added Method"?
The multiplier effect explains how an initial increase in investment leads to a greater increase in:
Ready to Master Determination of National Income?
Practice all 20 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.
Start Practicing — It's Free