Table 20-4 Source: U.S. Bureau of Census
-Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?
A)There has been no change in overall income inequality because the share of income held by the fourth fifth is nearly identical.
B)Overall income inequality has worsened slightly, as shown by the simultaneous increase in the share of income held by the top fifth and the decrease in the share of income held by the bottom fifth.
C)Overall income inequality has improved because the share held by the second fifth has declined by 0.5%.
D)None of the above is correct.

Question

Table 20-4  Source: U.S. Bureau of Census
-Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?
A)There has been no change in overall income inequality because the share of income held by the fourth fifth is nearly identical. 
B)Overall income inequality has worsened slightly, as shown by the simultaneous increase in the share of income held by the top fifth and the decrease in the share of income held by the bottom fifth. 
C)Overall income inequality has improved because the share held by the second fifth has declined by 0.5%. 
D)None of the above is correct.

Quizplus · Accepted Answer

The data in the table show that the share of income held by the top fifth increased from 49.8% in 2000 to 51.1% in 2011, while the share held by the bottom fifth decreased from 3.5% to 3.2%. This indicates a slight worsening of overall income inequality. The fact that the share held by the fourth fifth is nearly identical does not necessarily mean that there has been no change in overall income inequality, as the shares of income held by the other fifths may have shifted. The decline in the share held by the second fifth does not necessarily mean that overall income inequality has improved, as this may be due to factors such as changes in demographics or economic conditions that have affected this group in particular.