Distribution of National Income

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The level of national income is the basic determinant of the market demand for a good. Therefore, the national income higher will be the demand for all normal goods and services. Apart from this, the distribution pattern of the national income is also an important determinant for demand of a good. If national income is evenly distributed, market demand for normal goods will be the largest. If national income is unevenly distributed, i.e., if majority of population belongs to the lower income groups, market demand for essential goods, including inferior ones, will be the largest whereas the demand for other kinds of goods will be relatively less.

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