Comprehension
Let's talk first about the facts on income distribution. Thirty years ago we were a relatively middleclass nation. It had not always been thus: Gilded Age America was a highly unequal society, and it stayed that way through the 1920s During the 1930s and '40s, however, America
experienced what the economic historians Claudia Goldin and Robert Margo have dubbed the Great Compression: a drastic narrowing of income gaps, probably as a result of New Deal policies.
And the new economic order persisted for more than a generation: Strong unions; taxes on
inherited wealth, corporate profits and high incomes; close public scrutiny of corporate
management--all helped to keep income gaps relatively small. The economy was hardly egalitarian, but a generation ago the gross inequalities of the 1920s seemed very distant. Now
they're back. According to estimates by the economists Thomas Piketty and Emmanuel Saez-confirmed by data from the Congressional Budget Office--between 1973 and 2000 the average real
income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the
income of the top one- percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent. (Those numbers exclude capital gains.) The distribution of income in the United States has gone right back to Gilded Age levels of inequality.
Question: 1
Figures about the American Economy show that:
Figures about the American Economy show that:
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In reading comprehension, pay attention to specific terms and phrases that directly describe economic changes or conditions. In this case, terms like "income gaps" and "Gilded Age" provide clues to the correct answer.
Updated On: Apr 18, 2026
- The New Deal is responsible for the decline in US economy.
- Income differences between American people have become as much as the 1920s.
- A drastic narrowing of income differences has occurred.
- None of the Above.
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The Correct Option is B
Solution and Explanation
Step 1: Understanding the passage.
The passage discusses the changes in the American economy and income distribution. It mentions that during the 1930s and '40s, income gaps were smaller, but later, income inequalities increased again, approaching the levels of the 1920s.
Step 2: Analyzing the options.
- (a) The New Deal is responsible for the decline in the US economy: This is incorrect, as the passage does not mention the New Deal causing a decline but rather explains the New Deal’s role in reducing income gaps.
- (b) Income differences between American people have become as much as the 1920s: Correct, as the passage explicitly states that the distribution of income has reverted to Gilded Age levels, similar to the 1920s.
- (c) A drastic narrowing of income differences has occurred: This is incorrect because the passage highlights that while income differences were smaller in the past, they have widened again.
- (d) None of the Above: This is incorrect because option (b) is the correct answer.
Step 3: Conclusion.
The correct answer is (b) because the passage indicates that income differences have increased again, reaching the levels of the 1920s.
The passage discusses the changes in the American economy and income distribution. It mentions that during the 1930s and '40s, income gaps were smaller, but later, income inequalities increased again, approaching the levels of the 1920s.
Step 2: Analyzing the options.
- (a) The New Deal is responsible for the decline in the US economy: This is incorrect, as the passage does not mention the New Deal causing a decline but rather explains the New Deal’s role in reducing income gaps.
- (b) Income differences between American people have become as much as the 1920s: Correct, as the passage explicitly states that the distribution of income has reverted to Gilded Age levels, similar to the 1920s.
- (c) A drastic narrowing of income differences has occurred: This is incorrect because the passage highlights that while income differences were smaller in the past, they have widened again.
- (d) None of the Above: This is incorrect because option (b) is the correct answer.
Step 3: Conclusion.
The correct answer is (b) because the passage indicates that income differences have increased again, reaching the levels of the 1920s.
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Question: 2
Between 1973 and 2000:
Between 1973 and 2000:
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In analyzing data, always pay attention to the specific percentages and comparisons made in the passage. Here, the increase of 7% for the bottom 90% is a key clue for the correct answer.
Updated On: Apr 18, 2026
- 90% of Americans have seen relatively better income levels.
- 90% of Americans have seen their income transferred to the rich.
- 90% of Americans have seen their current value of income better than 1920s.
- 90% of Americans’ income has escalated more than the income of 0.001% Americans.
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The Correct Option is A
Solution and Explanation
Step 1: Understanding the passage.
According to the data provided, from 1973 to 2000, the average income of the bottom 90% of American taxpayers grew, albeit slightly.
Step 2: Analyzing the options.
- (a) 90% of Americans have seen relatively better income levels: This is correct as the passage states the average real income of the bottom 90% of taxpayers rose by 7%.
- (b) 90% of Americans have seen their income transferred to the rich: This is not mentioned in the passage. The passage does not say that income has been transferred to the rich.
- (c) 90% of Americans have seen their current value of income better than 1920s: This is incorrect. The passage highlights that income gaps have increased and the income distribution is similar to the 1920s.
- (d) 90% of Americans’ income has escalated more than the income of 0.001% Americans: This is incorrect as the passage does not state that the bottom 90% have outpaced the top earners.
Step 3: Conclusion.
The correct answer is (a), as the passage confirms that the average real income of the bottom 90% of taxpayers increased by 7% between 1973 and 2000.
According to the data provided, from 1973 to 2000, the average income of the bottom 90% of American taxpayers grew, albeit slightly.
Step 2: Analyzing the options.
- (a) 90% of Americans have seen relatively better income levels: This is correct as the passage states the average real income of the bottom 90% of taxpayers rose by 7%.
- (b) 90% of Americans have seen their income transferred to the rich: This is not mentioned in the passage. The passage does not say that income has been transferred to the rich.
- (c) 90% of Americans have seen their current value of income better than 1920s: This is incorrect. The passage highlights that income gaps have increased and the income distribution is similar to the 1920s.
- (d) 90% of Americans’ income has escalated more than the income of 0.001% Americans: This is incorrect as the passage does not state that the bottom 90% have outpaced the top earners.
Step 3: Conclusion.
The correct answer is (a), as the passage confirms that the average real income of the bottom 90% of taxpayers increased by 7% between 1973 and 2000.
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Question: 3
All the data quoted are from:
All the data quoted are from:
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Always verify the source of the data mentioned in the passage, especially when it references specific economists or researchers.
Updated On: Apr 18, 2026
- US government data.
- Data provided by Thomas Piketty and Emmanuel Saez.
- Studies done by Claudia Goldin and Robert Margo.
- None of the above.
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The Correct Option is B
Solution and Explanation
Step 1: Understanding the passage.
The passage references estimates by economists Thomas Piketty and Emmanuel Saez, who provided the data that compares income distributions from 1973 to 2000.
Step 2: Analyzing the options.
- (a) US government data: This is incorrect. The passage specifically mentions data from economists Piketty and Saez, not from the government.
- (b) Data provided by Thomas Piketty and Emmanuel Saez: This is correct as the data referenced in the passage was provided by these economists.
- (c) Studies done by Claudia Goldin and Robert Margo: This is incorrect. The passage does mention these historians but in a different context.
- (d) None of the above: This is incorrect because option (b) is correct.
Step 3: Conclusion.
The correct answer is (b) as the passage clearly cites Thomas Piketty and Emmanuel Saez as the source of the quoted data.
The passage references estimates by economists Thomas Piketty and Emmanuel Saez, who provided the data that compares income distributions from 1973 to 2000.
Step 2: Analyzing the options.
- (a) US government data: This is incorrect. The passage specifically mentions data from economists Piketty and Saez, not from the government.
- (b) Data provided by Thomas Piketty and Emmanuel Saez: This is correct as the data referenced in the passage was provided by these economists.
- (c) Studies done by Claudia Goldin and Robert Margo: This is incorrect. The passage does mention these historians but in a different context.
- (d) None of the above: This is incorrect because option (b) is correct.
Step 3: Conclusion.
The correct answer is (b) as the passage clearly cites Thomas Piketty and Emmanuel Saez as the source of the quoted data.
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Question: 4
0.001% of the tax paying population have seen their income levels:
0.001% of the tax paying population have seen their income levels:
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In reading comprehension, look for specific terms like "capitalist relations" and "production process" to identify key reasons behind economic changes.
Updated On: Nov 24, 2025
- Rise because of speculations in the Stock Market.
- Fall because of speculations in the Stock Market.
- Rise because of capitalist relations in the production process.
- Fall because of capitalist relations in the production process.
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The Correct Option is C
Solution and Explanation
Step 1: Understanding the passage.
The passage explains that the top 0.001% of income earners in the United States have seen a dramatic increase in their income. This rise is attributed to capitalist relations in the production process, rather than speculation in the stock market.
Step 2: Analyzing the options.
- (a) Rise because of speculations in the Stock Market: This is incorrect because the passage does not attribute the rise in income to stock market speculations.
- (b) Fall because of speculations in the Stock Market: This is incorrect, as it contradicts the information in the passage that highlights the rise, not a fall, in income.
- (c) Rise because of capitalist relations in the production process: This is correct. The passage attributes the rise in income to capitalist relations that concentrate wealth at the top.
- (d) Fall because of capitalist relations in the production process: This is incorrect, as the passage indicates a rise, not a fall.
Step 3: Conclusion.
The correct answer is (c), as the passage clearly states that the rise in income for the 0.001% is due to capitalist relations in the production process.
The passage explains that the top 0.001% of income earners in the United States have seen a dramatic increase in their income. This rise is attributed to capitalist relations in the production process, rather than speculation in the stock market.
Step 2: Analyzing the options.
- (a) Rise because of speculations in the Stock Market: This is incorrect because the passage does not attribute the rise in income to stock market speculations.
- (b) Fall because of speculations in the Stock Market: This is incorrect, as it contradicts the information in the passage that highlights the rise, not a fall, in income.
- (c) Rise because of capitalist relations in the production process: This is correct. The passage attributes the rise in income to capitalist relations that concentrate wealth at the top.
- (d) Fall because of capitalist relations in the production process: This is incorrect, as the passage indicates a rise, not a fall.
Step 3: Conclusion.
The correct answer is (c), as the passage clearly states that the rise in income for the 0.001% is due to capitalist relations in the production process.
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Question: 5
Represent data mentioned above in terms of a graph or pie chart.
Represent data mentioned above in terms of a graph or pie chart.
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In data representation, ensure that your chart highlights the key points, such as income disparities, and allows the viewer to easily see the differences between groups.
Updated On: Nov 24, 2025
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Solution and Explanation
Step 1: Visualizing the Data.
A pie chart or graph could be used to represent the data on income distribution. The distribution could show the percentage of income earned by different segments of the population, with 0.001% of tax-paying Americans receiving the majority of the wealth, followed by the bottom 90%, which has a small share of the income. The top 0.01% and 0.1% of income earners would show a much larger share than the average American.
Step 2: Designing the Chart.
The chart should highlight the drastic difference between the income distribution of the bottom 90% and the top 0.01%. The chart can have labels and proportions that indicate the relative growth of income for different groups.
Step 3: Conclusion.
This chart would visually represent the income disparities discussed in the passage, highlighting the significant concentration of income at the top. 
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