# Calculate disposable income in a hypothetical economy?

The table below shows data for a hypothetical economy. Use the data and your knowledge of the first and second national income accounting identities to answer the questions. All figures in the table are in millions of dollars.

Consumption (C) 300

Investment (I) 50

Government purchases (G) 70

Government transfer payments (TP) 15

Taxes (T) 75

Exports (X) 10

Imports (M) 5

3.1. Disposable income in the economy equals ____________.

A. $485 million

B. $365 million

C. $425 million

D. $240 million

How do I calculate disposable income?

I took me while to figure this out but i think i got it.

To find Disposable Income (DI) you first need to find your GDP (Y).

Y= C + I + G + (X-M)

Y = 300 + 50+ 5 + 70

Y=425

So the formula for DI ( Gross Income - Taxes + Transfer Payments) is

DI = Y - T + TP

DI = 425 - 75 + 15

DI = 365

From that you can find savings (Whatever is not consumed is saved)

S= DI - C

S = 365 - 300

S = 65

To find the leakage (Withdraws) just add up the components (Savings + Net Tax +Imports)

W=S + NT + M

W= 65 + 75 + 5

W = 145?

*Edit* I really don't know why the last number is not adding up but this is the RIGHT formula.

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Consumption (C) 300

Investment (I) 50

Government purchases (G) 70

Government transfer payments (TP) 15

Taxes (T) 75

Exports (X) 10

Imports (M) 5

3.1. Disposable income in the economy equals ____________.

A. $485 million

B. $365 million

C. $425 million

D. $240 million

How do I calculate disposable income?

**Answer:**I took me while to figure this out but i think i got it.

To find Disposable Income (DI) you first need to find your GDP (Y).

Y= C + I + G + (X-M)

Y = 300 + 50+ 5 + 70

Y=425

So the formula for DI ( Gross Income - Taxes + Transfer Payments) is

DI = Y - T + TP

DI = 425 - 75 + 15

DI = 365

From that you can find savings (Whatever is not consumed is saved)

S= DI - C

S = 365 - 300

S = 65

To find the leakage (Withdraws) just add up the components (Savings + Net Tax +Imports)

W=S + NT + M

W= 65 + 75 + 5

W = 145?

*Edit* I really don't know why the last number is not adding up but this is the RIGHT formula.

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