Question

What are the main reasons economists give for the increase in inequality of incomes?

A) Technological advancements
B) Globalization
C) Tax policies
D) All of the above

Answer 1

Economists give three main reasons for the increase in income inequality: technological advancements, globalization, and tax policies.

Step-by-step explanation:

Economists give three main reasons for the increase in inequality of incomes:

1. Technological advancements: Changes in technology, such as automation and computerization, have led to a higher demand for skilled workers and a decline in demand for low-skilled workers. This has resulted in a widening gap between high-income and low-income earners.
2. Globalization: The increased integration of economies and the outsourcing of jobs to countries with lower labor costs have contributed to income inequality. Globalization has favored skilled workers in developed countries while negatively affecting low-skilled workers in both developed and developing countries.
3. Tax policies: Tax policies can either exacerbate or alleviate income inequality. Some tax policies, such as regressive tax systems or tax breaks for the wealthy, can contribute to income inequality, while progressive tax systems and redistribution policies can help reduce it.