What is disposable income?

Disposable income refers to the amount of money that individuals have available to spend or save after they have paid taxes on their earnings. It represents the net income that households can use for various purposes, such as purchasing necessities, saving for the future, or indulging in leisure activities. Understanding disposable income is crucial in travel and tourism, as it helps businesses gauge how much consumers might be willing to spend on travel-related expenses.

In contrast, the other choices do not accurately describe disposable income. Money spent on luxury items pertains to an expenditure rather than a financial metric. Money invested in stocks represents capital allocated to financial assets, which typically occurs after determining disposable income. Similarly, money earned from investments refers to income generated through various investment vehicles and does not account for tax deductions. Thus, the concept of disposable income directly aligns with the definition provided in the correct answer, emphasizing its role as the residual income available for personal use after taxes.