National Disposable Income is equal to ______________________.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Net National Product at market prices + Other current transfers from the rest of the world
What a nation produces, net of depreciation, is its NNP at market prices. Besides this, it receives some goods and money from abroad for free, such as gifts and aid; these are other current transfers from the rest of the world. Adding the two gives the largest amount of goods and services the economy has at its disposal, the National Disposable Income.
National Disposable Income = NNPMP + Other current transfers from the rest of the world
Why the other options are incorrect
Option (1) C + I + G + NX — Incorrect. This is GDP at market prices by the expenditure method, a gross and domestic figure with nothing in it for transfers from abroad.
Option (2) Net National Product at market prices + Factor income paid to abroad — Incorrect. NNP already takes account of net factor income from abroad. What is added to reach disposable income is current transfers, which are not factor income at all.
Option (4) Gross National Product at market prices + Capital inflow from the rest of the world — Incorrect. A capital inflow, such as a loan, is a capital account transaction and not income, and the measure starts from the net, not the gross, product.
NCERT (2025-26): “Net National Product (nnp). Thus … National Disposable Income and Private Income Apart from these categories of aggregate macroeconomic variables, in India, a few other aggregate income categories are also used in National Income accounting • National Disposable Income = Net National Product at market prices + Other current transfers from the rest of the world The idea behind National Disposable Income is that it gives an idea of what is the maximum amount of goods and services the domestic economy has at its disposal.…” |