Yd is disposable income and Y is national gdp, this formula means that the government should consider increasing the disposable income of the residents through transfer payments or directly lowering the tax rates of certain taxes, so as to stimulate consumption and expand domestic demand. In addition, it should tax asset retention to improve investment relations and balance social income.?
Disposable income is the income in hand. That is, the part of salary income that is left after deducting the basic pension insurance, basic medical insurance, unemployment insurance, provident fund, personal income tax and so on. The money left after deducting them is at your disposal.
"Gross Domestic Product" (GDP) is an aggregate indicator of a country's final production results, while "National Disposable Income" (NDI) is an aggregate indicator of a country's final income, with GDP representing the total amount of production and NDI representing the total amount of income; NDI stands for total income.
Because, a country's GDP through the initial distribution of income and redistribution of the final to form a country's NDI, the total amount of production is not equal to the total amount of income, usually developed countries tend to be greater than the NDI GDP, while developing countries NDI tends to be less than the GDP, which reflects the distribution of the relationship between production and income.
Thus, it is the most important economic indicator to observe and analyze how income is distributed between countries, between regions, and between sectors and groups of people.
Extended information:
As a result of the factor of price increase in a certain period of time, so that the amount of consumer goods and social services that can be purchased with the same amount of money compared with the base period is correspondingly reduced, resulting in a decrease in the purchasing power of the currency and a devaluation of the currency.
Thus, when calculating the real growth of disposable income per capita, the influence of the price factor must be deducted. Among the various price indices compiled by the national statistics department, the one that best reflects the extent of the impact of prices on people's lives is the consumer price index. The consumer price index is deducted from the calculation of the real increase in per capita disposable income.
The specific method of deduction is expressed by the formula
Real growth rate of per capita disposable income = (per capita disposable income in the reporting period/per capita disposable income in the base period)/consumer price index-100%
Due to the factor of price increase in a certain period, the quantity of consumer goods and social services that can be purchased with the same amount of money is reduced compared with that of the base period. compared with the base period is correspondingly reduced, resulting in a decrease in the purchasing power of the currency and a depreciation of the currency. Therefore, it must be deducted when calculating the real growth of disposable income per capita.
Baidu Encyclopedia - Disposable Income