Question

Example of functional distribution of resources

Answer 1

The functional distribution of income refers to the amounts of income paid to various individuals or households. A single individual may receive income from more than one factor of production or from one source. A man may get income by offering his labour service, from renting his property (land or building) and from his holdings of company shares or government bonds.

When income is classified according to the size of income received by each households irrespective of the sources of that income, we are dealing with the size distribution of income. Progressive income taxes are imposed and subsidies are paid to reduce income inequality.

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