Question

income inequality is caused by
a. labor productivity and the productivity of capital owned.
b. technological change and the extent of international trade.
c. taxes and changes in tax laws.
d. both a and b.
e. all of the above.

Explanation:

• Labor productivity and capital - owned productivity (A) can lead to income differences as more productive workers or those with more productive capital earn more.
• Technological change (B) can create a skill - biased demand, increasing the income of high - skilled workers more. International trade can also affect income distribution as it impacts different sectors differently.
• Taxes and tax laws (C) can influence after - tax income. Progressive taxes can reduce inequality, while regressive ones or changes that favor the rich can increase it.

Answer:

E. all of the above.