National Disposable Income
National Disposable Income (NDY) refers to income that is readily available for disposal to the entire nation. It consists of both factor and transfer income. It is also referred to as Net National Disposable Income.
National Disposable Income comprises of Net Indirect Taxes and Net Current Transfers from the Rest of the World
NDY indicates the total income that is available from all economic sources. It means:
- NDY includes Net Indirect Taxes because it is the government’s transfer income and the government is free to utilise it whenever it considers right.
- NDY also includes Net Current Transfers from the rest of the world, which is the government’s transfer income from abroad.
National Disposable Income = National Income + Net Indirect Taxes + Net Current Transfers from the Rest of the World
Another Method to Calculate National Disposable Income
The NDY is the maximum income available that can be saved and spent by a nation on the consumption of goods and services. The formula for NDY is thus:
National Disposable Income = National Consumption Expenditure1 + National Savings
1 National Consumption Expenditure is the sum of Private Final Consumption Expenditure and Government Final Consumption Expenditure.
Personal, National, and Gross National Disposable Income
Personal, National, and Gross National Disposable Income are three different types of income calculated by economists to measure the savings and spending rates of households and the whole country. Personal Disposable Income is part of personal income that is available at the disposal of a household. National Disposable Income is the income that is readily available for disposal to the entire nation. Gross National Disposable Income calculates income available for final consumption and gross saving to the nation.
Table of Content
- Personal Disposable Income
- National Disposable Income
- Gross National Disposable Income
- Difference between National Disposable Income and National Income
- Difference between National Disposable Income and Personal Disposable Income
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