|
|
IDENTIFICATION LAG: In the context of economic policies, the time between a shock to the economy and realization that the shock has occurred. This is one of several policy lags that limit the effectiveness of stabilization policies designed to correct business-cycle fluctuations. This is also one of two inside lags. The other is an implementation lag. Also termed recognition lag, the identification lag emerges due to the time needed to measure economic activity. While the lag is generally positive, it actually can be negative through accurate forecasting techniques. When negative policies can be undertaken to correct a problem before it occurs.
Visit the GLOSS*arama
|
|
|
|
                           DISPOSABLE INCOME: The total income that can be used by the household sector for either consumption expenditures or saving during a given period of time, usually one year. Disposable income (DI) is one of three measures of income reported in the National Income and Product Accounts maintained by the Bureau of Economic Analysis. The other two are national income (NI) and personal income (PI). Two related measures of production are gross domestic product (GDP) and net domestic product (NDP). Disposable income, also commonly called disposable personal income (DPI), is after-tax income that the household sector has at its "disposal." It other words the household sector can use this income for either saving or consumption. It is officially calculated as the difference between personal income and personal tax and nontax payments. In the numbers game, personal tax and nontax payments are about 15 percent of personal income, which makes disposable income about 85 percent of personal income.The derivation of disposable income (DI) from personal income (PI) by subtracting personal taxes (PT) is illustrated in this equation: A reasonable question might arise: "Of what use is disposable income in the study of the macroeconomy?" After all, national income measures the total income EARNED by factors of production and personal income measures the total income RECEIVED by the household sector. What more is needed?Disposable income provides useful information about the amount of income received by the household sector that is actually available for spending. The key is that a portion of personal income is gobbled up by income taxes. While the household sector officially receives personal income, the government sector is primed and ready to extract a portion of this personal income in income taxes. Disposable income is the income available to the household sector AFTER income taxes are paid. It is disposable income, not personal income, that the household sector has available for spending. In particular, the two uses of disposable income are consumption expenditures (C) and saving (S), which is illustrated in this equation: These consumption expenditures (C), by the way, are the very same consumption expenditures that together with investment expenditures, government purchases, and net exports, are used to purchase gross domestic product. And the saving (S) is the very same saving that enters the financial markets and is borrowed by the business and government sectors to help pay for investment expenditures and government purchases.While the division between consumption and saving ebbs and flows, saving is typically only 2 to 3 percent (or less) of disposable income, making consumption expenditures 97 to 98 percent (or more) of disposable income. This 2 to 3 percent portion of disposable income used for saving is often referred to as the saving rate.
Recommended Citation:DISPOSABLE INCOME, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 15, 2018].
Check Out These Related Terms... | | | | | | | | | | | | | |
Or For A Little Background... | | | | | | | | |
And For Further Study... | | | | | | | | | | |
Related Websites (Will Open in New Window)... | |
Search Again?
Back to the WEB*pedia
|
|
|
RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time at a garage sale looking to buy either a large, stuffed giraffe or a birthday greeting card for your aunt. Be on the lookout for attractive cable television service repair people.
Your Complete Scope
This isn't me! What am I?
|
|
|
It's estimated that the U.S. economy has about $20 million of counterfeit currency in circulation, less than 0.001 perecent of the total legal currency.
|
|
|
"Give the American people a good cause, and there's nothing they can't lick. " -- John Wayne, actor
|
|
FOW
Free on Wagon
|
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|
