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Chapter 7: Q.13 (page 186)

How did the Industrial Revolution increase the economic growth rate and income levels in the United States?

Short Answer

Expert verified

The economic growth rate and income level in the United States increases because productivity increase and production cost decreases by the implementation of the Industrial Revolution.

Step by step solution

01

Definition

Industrial Revolution refers to the use of newly invented machinery in the industrial sector which brings changes in social and economic activity. Industrial Revolution was started to make a growth in industrial and manufacturing sectors due to which the whole economy can develop.

02

Explanation

When in any economy say United States industrial revolution is used that creates the opportunity to increase the productivity and decrease the production cost thus the economic growth rate increases and the economy start to develop. New technologies invented and used in the industrial revolution increase productivity by which more goods are produced and sold thus the income level of the United States also increases.

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Most popular questions from this chapter

Describe some of the political and social tradeoffs that might occur when a less developed country adopts a strategy to promote labor force participation and

economic growth via investment in girls鈥� education.

Say that the average worker in Canada has a productivity level of \(30per hour while the average worker in the United Kingdom has a productivity level of \)25per hour (both measured in U.S. dollars). Over the next five years, say that worker productivity in Canada grows at 1%per year while worker productivity in the UK grows 3%per year. After five years, who will have the higher productivity level, and by how much?

Assume there are two countries: South Korea and the United States. South Korea grows at 4% and the United States grows at 1%. For the sake of simplicity, assume they both start from the same fictional income level, $10,000. What will the incomes of the United States and South Korea be in 20 years? By how many multiples will each country's income grow in 20 years?

Would the following events usually lead to capital deepening? Why or why not?

  1. A weak economy in which businesses become reluctant to make long-term investments in physical capital.
  2. A rise in international trade.
  3. A trend in which many more adults participate in continuing education courses through their employers and at colleges and universities.

Why does productivity growth in high-income economies not slow down as it runs into diminishing returns from additional investments in physical capital and human capital? Does this show one area where the theory of diminishing returns fails to apply? Why or why not?
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