Question

Does unequal distribution of income causes decrease in demand of normal good

Answer 1

Unequal distribution of income somewhere affect the demand for goods and services in the market directly or indirectly.

EXPLANATION -

Unequal distribution means a particular sector of society is having good money supply whereas another sector is having a lower money supply.

Now the ones with low income will focus more on the accumulation of money as their future savings and lower their investments on other goods and services, for example, education, healthcare, entertainment etc.

This will lead to a decrease in demand for goods and services related to such fields.