Economics • Economic BasicsHard
In macroeconomic accounting, how is National Disposable Income computed starting from Net National Product at factor cost?
A. By adding current transfers from the rest of the world and subtracting direct corporate taxes
B. By adding net indirect taxes and net current transfers from the rest of the world✓ Correct Answer
C. By subtracting depreciation and adding export subsidies
D. By incorporating capital consumption allowances and undistributed corporate profits
💡 Solution & Explanation
National Disposable Income represents the total income available to residents of a country for consumption or saving. It is derived from Net National Product at factor cost by adding net indirect taxes levied by the government and net current transfers from abroad such as foreign remittances. This metric reflects the actual purchasing power accessible within the domestic economy.
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