Wealth and income are both important determinants of social class. Which of the following best characterizes the relationship between wealth and income in the United States?
A) Income disparities between rich and poor have increased in the past three decades, whereas wealth disparities have decreased during the same time.
B) Wealthy people almost always inherited their money; thus there is no relationship between wealth and income.
C) The same factors that limit people's incomes also limit their ability to accumulate wealth.
D) Whereas race, education, and age influence income, wealth is independent of these variables.

Question

Quizplus · Accepted Answer

Income and wealth are correlated, but they are distinct concepts. Income refers to the amount of money a person earns on a regular basis from work or investment, while wealth refers to a person's net worth or total assets minus debts. The relationship between income and wealth in the United States is complex, but studies have shown that the same factors that limit people's incomes (such as education, race, and gender) also limit their ability to accumulate wealth. In other words, people who earn less also tend to have fewer opportunities to save, invest, and acquire assets that appreciate in value over time. This helps explain why wealth disparities are often more pronounced than income disparities, particularly among racial and ethnic minorities. As such, option C is the best choice. Options A and D are incorrect because income and wealth disparities have both been increasing in the United States in recent decades, and wealth disparities are influenced by a wide range of factors beyond race, education, and age. Option B is also incorrect because most wealthy people in the United States did not inherit their wealth; instead, they acquired it through various means such as entrepreneurship, investing, and real estate.

Wealth and Income Are Both Important Determinants of Social Class