Question

income inequality in the united states has increased somewhat over the past 30 years. two factors that appear to have contributed to this are
a. tax cuts on high - income individuals and large increases in prices of stocks.
b. rapid technological change and expanding international trade.
c. outsourcing of jobs by u.s. firms and cuts in taxes on capital gains.
d. strong economic growth and low inflation.

Explanation:

• Option A: Tax cuts on high - income individuals can widen the income gap as they keep more of their income. However, large increases in stock prices mainly benefit those who already own stocks (often higher - income groups), but this is not as comprehensive a factor as some others.
• Option B: Rapid technological change has increased the demand for high - skilled workers (raising their wages) and reduced the demand for low - skilled workers (lowering their wages). Expanding international trade has led to job losses in some low - skill manufacturing sectors (as production moves to countries with lower labor costs) and growth in sectors that are more skill - intensive (where the US has a comparative advantage). This combination is a well - recognized cause of income inequality.
• Option C: Outsourcing of jobs by US firms affects some workers, but cuts in taxes on capital gains mainly benefit those with capital (higher - income groups). However, it is not as broad a factor as technological change and trade.
• Option D: Strong economic growth and low inflation are generally positive for the overall economy and do not directly contribute to increased income inequality.

Answer:

B. rapid technological change and expanding international trade.