ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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when it is high, government debts are low
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it represents the actual money people have to spend, invest, and save in the economy
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when it is low, it shows that businesses are investing money back into the economy
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when it is high, it allows for higher government revenues and greater transfer payments
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Detailed explanation-1: -Significance of Disposable Income It helps economists to measure the savings and spending rates of the households. Disposable income is used to derive several economic indicators and measures such as discretionary income and personal saving rate.
Detailed explanation-2: -In aggregate, when disposable income increases, households have more money to either save or spend, which naturally leads to a growth in consumption. Consumer spending is one of the most important determinants of demand; it creates the demand that keeps companies profitable and hiring new workers.
Detailed explanation-3: -Disposable income is the amount of money left to spend and save after income tax has been deducted. Individual consumers can use disposable income to help build their budget and understand how much money they can allocate to certain expenses.
Detailed explanation-4: -Disposable income of the potential customers is an important factor to be considered for a business plan. It helps in deciding the pricing of the business. The average disposable income of the customers in the target market helps the business decide the price of the product being offered by the business.