Question

From the following data calculate personal income and personal disposable income.

(a)	Net domestic product at factor cost	8,000
(b)	Net factor income from abroad	200
(C)	Undisbursed profit	1,000
(d)	Corporate tax	500
(e)	Interest received by households	1,500
(f)	Interest paid by households	1,200
(g)	Transfer income	300
(h)	Personal tax	500

Answer 1

Personal income = Net domestic product at factor cost + Net factor income from abroad + (Interest received by households – Interest paid by households) + Transfer income – Corporate tax – Undisbursed profit.

Therefore, – PI = 8000 + 200 + (1500 – 1200) + 300 – 500 -1000 

= 8000 + 200 + 300+300-500-1000 

= 7300

Personal Disposable Income = Personal Income – Personal Tax Therefore PDI 

= 7300 – 500 

= 6800.