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ACTION LAG: In the context of economic policies, a part of the implementation lag involving the time it takes for appropriate policies to be launched once they have been agreed to by policy makers. Another part of the implementation lag is the decision lag. For fiscal policy, this involves appropriating funds to government agencies (for government spending) or changing the tax code (for taxes) For monetary policy, this involves the buying and selling government securities in the open market. The action lag is usually shorter for monetary policy than fiscal policy.
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                           DISPOSABLE INCOME AND PERSONAL INCOME: Disposable income (DI) is the total income that can be used by the household sector for either consumption or saving during a given period of time, usually one year. Personal income (PI) is the total income received by the members of the domestic household sector, which may or may not be earned from productive activities during a given period of time, usually one year. Disposable income is after-tax income that 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 personal 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.
Recommended Citation:DISPOSABLE INCOME AND PERSONAL INCOME, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: June 1, 2023].
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Today, you are likely to spend a great deal of time at a going out of business sale seeking to buy either a birthday gift for your mother or a weathervane with a horse on top. Be on the lookout for high interest rates.
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