Which of the following is commonly used as an argument in support of income inequality?

• A. Income inequality provides incentives for innovation and hard work.
• B. Income inequality increases social unrest and political instability.
• C. Income inequality reduces consumer demand for goods and services.
• D. Income inequality leads to lower overall economic growth.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of income inequality, which refers to the uneven distribution of income within a population.
2. Step 2: Recognize that arguments about income inequality often focus on its effects on economic behavior and social outcomes.
3. Step 3: Identify that one common argument in support of income inequality is that it provides incentives for individuals to innovate and work harder, as higher rewards motivate effort and creativity.
4. Step 4: Contrast this with arguments against income inequality, such as increased social unrest, reduced consumer demand, and lower economic growth, which highlight potential negative consequences.
5. Step 5: Conclude that the argument supporting income inequality centers on its role in encouraging innovation and hard work, which can drive economic progress.