Q91 (CDS-II/2019) Economy › Basic Concepts & National Income › National income aggregates Answer Verified

Which one of the following equals Personal Disposable Income?

Personal Income-Direct taxes paid by households and miscellaneous fees, fines, etc.

Private Income-Saving of Private Corporate Sectors-Cor- porallon Tax

Private Income -Taxes

Total expenditure of House- holds-Income Tax-Gifts received

Result

Your answer: — · Correct: A

Explanation

Personal Disposable Income (PDI) represents the actual income available to households for consumption or saving after fulfilling all mandatory obligations to the government. According to national income accounting principles, PDI is derived by subtracting personal tax payments (such as income tax) and non-tax payments (such as miscellaneous fees, fines, and penalties) from Personal Income (PI) [2]. While Personal Income includes factor incomes and transfer payments, it is not entirely available for spending until these direct taxes and miscellaneous government dues are settled [1]. Other aggregates like Private Income include corporate savings and taxes, which do not reach households [4]. Therefore, the formula for PDI is Personal Income minus direct taxes paid by households and miscellaneous fees/fines [2]. This measure reflects the true purchasing power of the household sector in an economy [2].

Sources

[1] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > NNP ≡ GNP – Depreciation > p. 26
[2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > Personal Disposable Income (PDI): It is the income that remains with the individuals or Ò. households after deduction of all direct taxes levied against their income and property by the government. > p. 10
[4] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Redistribution Function of Government Budget > p. 67

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Which one of the following equals Personal Disposable Income?

Explanation

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