Final answer:
The claim that income inequality has reduced since 1970 is false; income inequality in the United States has instead increased, influenced by household changes and wage disparities. Economic inequality in the U.S. is relatively high compared to Western Europe but lower than some other regions and countries.
Step-by-step explanation:
The statement that income inequality has declined significantly since 1970 is false. In fact, income inequality has increased in the United States since the 1970s. This increase can be attributed to factors such as the changing structure of American households, wage disparities, and what some economists refer to as 'winner take all' labor markets. Such factors have significantly contributed to the growing gap between the rich and the poor. While wealth distribution is more unequal than income distribution, tools like quintile measurements allow us to measure inequality in both areas. According to the Federal Reserve Bank's Survey of Consumer Finance, updates on wealth data indicate that wealth is becoming even more unevenly distributed over time.
Furthermore, when comparing economic inequality globally, the U.S. has a relatively high degree of income inequality compared to many Western European countries, such as Germany. However, it is less unequal than certain low-income and middle-income countries. Regions like Latin America, with countries such as Brazil and Mexico, exhibit higher levels of income inequality than the U.S.