- Thursday, November 6, 2008, 13:45
- Economics
- 482 views
Real Personal Disposable Income
More often than not it is real PDI which we need to consider. For example, the basic consumption function relates real consumers' expenditure to real PDI. To calculate it we use the consumers' expenditure deflator as a measure of the relevant price level. (Why this and not, say, the GDP deflator?) Hence,
Real PDI = (Nominal PDI/Cons. Exp. Deflator) x 100
Table 1-8 below ...
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- Thursday, November 6, 2008, 13:42
- Economics
- 790 views
Personal Disposable Income
GDP and national income must be carefully distinguished from personal disposable income (PDI) which is the amount actually available for spending and saving to the personal sector (which consists mainly of households but also unincorporated businesses and charities). To arrive at PDI we need to take account of three factors.
• Undistributed profits - not all profits earned by firms are paid out as ...
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