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Chapter 20: Problem 13

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

Short Answer

Expert verified
The Industrial Revolution increased the economic growth rate and income levels in the United States by introducing new technologies and increasing productivity. This led to an accumulation of capital, improvements in infrastructure, and a shift in labor force requirements. As a result, businesses could access wider markets and contribute to significant economic growth and advancements in living standards during this period.

Step by step solution

01

Definition of Industrial Revolution

The Industrial Revolution was the major shift of technological, socioeconomic and cultural conditions that occurred in the late 18th and early 19th century. This period saw a shift from an agrarian, handicraft economy to an industrial and manufacturing economy, which played a significant role in shaping modern society.
02

Factors Contributing to Economic Growth

Economic growth can be attributed to several factors, including increases in productivity, technological advancements, accumulation of capital, improvements in infrastructure, and better access to markets. The Industrial Revolution was responsible for contributing to many of these factors.
03

Technological Advancements

The Industrial Revolution brought about numerous technological advancements, such as the steam engine, textile machines, and the telegraph. These innovations led to improvements in production processes, which increased productivity and made goods more accessible and affordable for a larger population.
04

Accumulation of Capital

As productivity increased, businesses began generating more revenue, leading to an accumulation of capital. This allowed businesses to invest further in new technologies, skills, and innovations that further contributed to economic growth.
05

Improvements in Infrastructure

The Industrial Revolution led to improvements in transportation and communication infrastructure, such as the construction of railroads and telegraph lines. This enabled faster and more efficient movement of goods and people, which allowed businesses to access wider markets and further spurred economic growth.
06

Labor Force

As the economy transitioned from an agrarian to an industrial model during the Industrial Revolution, there was a shift in labor force requirements. Laborers moved from rural areas to urban centers to work in factories, creating more demand for labor and leading to higher wages. This increase in income levels contributed to a better standard of living for many people.
07

Conclusion

In summary, the Industrial Revolution contributed to economic growth and increased income levels in the United States by introducing new technologies, increasing productivity, enabling the accumulation of capital, and improving both infrastructure and labor force conditions. These factors, combined with better access to markets, created significant economic growth and advancements in living standards during this period.

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Most popular questions from this chapter

Would the following events usually lead to capital deepening? Why or why not? a. A weak economy in which businesses become reluctant to make long-term investments in physical capital. b. A rise in intermational trade. c. A trend in which many more adults participate in continuing education courses through their employers and at colleges and universities.

Would you expect capital deepening to result in diminished returns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?

Use an example to explain why, after periods of rapid growth, a low-income country that has not caught up to a high-income country may feel poor.

Say that the average worker in Canada has a productivity level of \(\$ 30\) per hour while the average worker in the United Kingdom has a productivity level of \(\$ 25\) per 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?

Say that the average worker in the U.S. economy is eight times as productive as an average worker in Mexico. If the productivity of U.S. workers grows at \(2 \%\) for 25 years and the productivity of Mexico's workers grows at \(6 \%\) for 25 years, which country will have higher worker productivity at that point?
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