WAEC Economics 2014 Theory — Question 14

Model answer

(i) Personal income is the total income received by individuals/households from all sources (e.g. wages, rent, interest, dividends) before the deduction of personal income tax. (ii) Disposable income is the income left for an individual to spend or save after personal income tax has been deducted from personal income. Example: if a worker's personal income is ₦100,000 and tax deducted is ₦20,000, disposable income = ₦80,000.