Which income reflects purchasing power of the households?

personal disposable income

The correct answer is Option 3: Personal disposable income

Personal income: This includes all income received by individuals before taxes and deductions. It doesn't account for mandatory deductions like taxes and social security contributions, which significantly impact purchasing power.

Personal disposable income is derived by subtracting direct taxes from the personal income. It denotes the purchasing power of the person which is the quantity of goods he/she can purchase with his income.