Assume personal income was $28 million last year. Personal outlays were $20 million and personal current taxes were $5 million.
a. What was the amount of disposable personal income last year?
Disposable personal income (DPI) = personal income – personal current taxes
DPI = xxx million – xxx million = xxx million
b. What was the amount of personal savings last year?
Personal savings (PS) = disposable personal income – personal outlays
PS = xxx million – xxx million = xxx million
c. Calculate personal savings as a percentage of disposal personal income?
Savings rate = $ xxx million/$ xxx million = xxx %
a. To calculate the amount of disposable personal income, you subtract the personal current taxes from the personal income. In this case, the personal income is $28 million and the personal current taxes are $5 million. So, we can calculate it as follows:
Disposable personal income (DPI) = personal income - personal current taxes
DPI = $28 million - $5 million
DPI = $23 million
Therefore, the amount of disposable personal income last year was $23 million.
b. To calculate the amount of personal savings, you subtract the personal outlays from the disposable personal income. In this case, the disposable personal income is $23 million and the personal outlays are $20 million. So, we can calculate it as follows:
Personal savings (PS) = disposable personal income - personal outlays
PS = $23 million - $20 million
PS = $3 million
Therefore, the amount of personal savings last year was $3 million.
c. To calculate personal savings as a percentage of disposable personal income, you divide the personal savings by the disposable personal income and multiply it by 100 to express it as a percentage. In this case, the personal savings are $3 million and the disposable personal income is $23 million. So, we can calculate it as follows:
Savings rate = (personal savings / disposable personal income) x 100
Savings rate = ($3 million / $23 million) x 100
Savings rate = 0.1304 x 100
Savings rate = 13.04%
Therefore, the personal savings as a percentage of disposable personal income was 13.04%.