Question

according to the video you saw by dr. reiche in the course notes, the large decrease in household earnings and wealth in the united states from 1979 on was the result of:

○ a low saving rate.

○ a low investment rate.

○ both globalization and technological growth.

○ large capital losses.

○ a higher rate of inflation.

Explanation:

To determine the cause of the large decrease in US household earnings and wealth from 1979, we analyze each option:

• A low saving rate affects wealth accumulation over time but isn’t the primary driver of broad earnings/wealth decline.
• A low investment rate impacts economic growth but doesn’t directly explain household earnings/wealth drops.
• Globalization (e.g., offshoring, trade competition) and technological growth (e.g., automation replacing jobs) are key factors that reshaped labor markets and income distribution, reducing household earnings and wealth for many.
• Large capital losses (e.g., market crashes) are temporary and not the long - term driver from 1979 onward.
• Higher inflation affects purchasing power but isn’t the core reason for the structural decline in earnings/wealth.

Answer:

C. both globalization and technological growth.