Question

Kuznets’ inverted-U hypothesis: a. implies that things must get worse before they get better. b. suggests that inequality will worsen and then improve as a country grows. c. suggests that inequality will improve and then worsen as a country grows. d. points out six characteristics of modern economic growth.

Answer 1

b. suggests that inequality will worsen and then improve as a country grows.

Step-by-step explanation:

The Kuznetz curve suggests that during the process of economic development, the tendency is that inequality will increase in the short term and decrease in the long term. This is because in the short term, increased productivity in the economy occurs through demand for more skilled workers, widening the gap between income classes. In the long run, however, this trend tends to diminish as the education level of the country's inhabitants tends to improve, as economic progress will cause improvements in the education system and the gap between workers tends to fall. Therefore the curve has an inverted U shape.