Question

When you begin your first full-time job, you have a monthly income of $3,500. Your federal and state taxes are $1,000. You pay $600 in rent, have a $300 car payment, and spend $300 on food and $200 on clothes. The remaining $1,100 would be considered your
a. net income.
b. disposable income.
c. discretionary income.
d. gross income.
e.earned income after taxes.

Answer 1

Answer:

c. discretionary income.

Explanation:

There are various incomes which are explained below:-  

a. Net Income: The income which is calculated after considering all expenses is called gross income.

b. Disposable income: The income which is computed after deducting the tax expenses is known as disposable income. It is not meant for basic necessities that means it considered only tax expenses.

c. Discretionary income: The income which is computed after considering the income, government taxes, other business expenses and day to day expenses is called discretionary income.

d. Gross income: The income which is calculated before considering all expenses is called gross income.

e. Earned income after taxes: The income which is earned after deducting the tax expenses is called earned income after taxes.

In the given situation, the most appropriate option is C.