Question

Over the past few decades, income inequality in the United States, measured by the relative shares of total income earned by the top and bottom 20% of individuals, has increased.
Which of the following represent plausible causes of income inequality? Check all that apply.

A. Some people choose to work longer hours than their peers.

B. Some individuals become wealthy by chance, while others have bad luck.

C. Some risk-takers end up earning exceptionally high incomes, while other risk-takers end up failing and earning little or no income.

D. Differences in ability make some people more adept at earning income than others.

Answer 1

Answer: All the options given are correct.

Explanation:

Income inequality is the differences in income of people. It is the aim of every government to reduce income inequality in a country by taking appropriate measures such as the use of progressive tax, infrastructural provision etc.

There are different causes of income inequality in an economy. One of the causes is differences in people's ability. Some peolle are more talented than others e.g footballers and actors. As a result, they may earn higher income than others.

Also, one who works longer hours is likely to make more money than others who work for shorter hours. Some people might also get wealthy through luck.