how does an increase in economic growth increase income inequality? Also are there any examples?
Correct me if I'm wrong, but it seems to me that there is a fallacy in this question.
I don't know how to mix in the BS terminology to make the argument prettified. But here's how it works.
Economic growth - More money. More money is spread across the classes. Assuming equal spread, the top class that consists of less people will have more wealth/person distributed. Therefore top class gains more money per person than bottom class.
However, I see fallacies in this question.
1. How are we calculating income inequality. This class is x times another in salary, or x+the other's salary.
2. Counterexample - in a socialist/communist country, considering an equal spread of money increased across classes, and the government allocation of economic growth to bring the bottom classes up would decrease income inequality.
3. Do not write what I am saying here. This is purely intuitive. Take the answer out of your textbook/teacher.
