Which of the Following Explains the Rise in Income Inequality

question 374

Multiple Choice

Which of the following explains the rise in income inequality in the United States from 1970 to 2008?

• A) An increase in minimum wages.
• B) An increase in the demand for skilled labor.
• C) An increase in the demand for unskilled labor.
• D) Reduced international trade with low-wage countries.

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Definitions:

Marginal Products

A new definition for the additional units of output gained by employing one more unit of a specific input, keeping all other inputs constant.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain the same.

Average Product

The output per unit of input, calculated by dividing total product by the quantity of input.

Prosecuting Attorney

A legal representative responsible for presenting the case in a criminal trial against an individual accused of breaking the law.