Answer to Question #249042 in Microeconomics for SHREYA

Question

In less than 800 words, explain how Thomas Piketty relates the return on capital (r) to the rate of economic growth (g) in the context of inequality. 

Answer 1

Thomas Piketty’s is the French economist whose English published book Capital in the twenty first century is considered inescapable. This book has threw a light on the interest in economic inequality. 

Thomas Piketty relates the return on capital (r) to the rate of economic growth (g) in the following manner:

"He explained that a growth of capital is faster than growth of economic growth over a period of time. This means over a time, capital grows faster than economic growth. But return from capital is invariably that means not everyone enjoys return on capital rather only few individuals can enjoy return on capital. This implies a unequal distribution of income that results in a economic inequality."