What is required to be subtracted from personal income in order to obtain personal disposable income?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Net tax payments by the households.
Personal Disposable Income (PDI) is the amount of income that households actually have available for spending and saving after paying taxes. It is calculated as:
Personal Disposable Income=Personal Income (PI) – Personal tax payments – Non-tax payments (such as fines) .