Question

Draw a steady-state diagram showing Britain before the industrial revolution. Label the capital stock in 1500 through 1502 as well as

steady-state capital, steady-state investment, and steady-state output.

Numbers #1.4-1.6

1 Technology and the Industrial Revolution Global Income, Maddison Historical Estimatas nd Re Suppose Britain's economy in the year 1500 is described by the following production function and parameters: s= 0.2 8 0.1 The capital stock is K1500 = 1 1.1. Fill in the following table, which will give us a sense of how Britain's economy evolved in the centuries before the Industrial Revolution. Capital K GDP Y iaio DGDProwth ear Depreciation rate from previous year 1500 1501 1502 1.2. Make a graph with GDP on the vertical axis and time on the horizontal axis. 1.3. If Britain kept the same level of technclogy A forever, what would be its capital stock in the long run? What would be its GDP? What would be the total growth in GDP from 1500 until it reached its steady-state (as a percentage of GDP in 1500)? L4. Draw a steady-state diagram showing Britain before the industrial revolution. Label the capital stock in 1500 through 1502 as well as steady-state cap灢al, steady-state investment, and steady- state output. L 5. Now suppose th e industrial Revolution begins, and the level of technology rises to AZ'-4. All other parametersare exactly as before the Industrial Revolution. What bthe new steady state level of ca pital and GDP? L6. Draw te shft n the production functon and the investment curve on vour steady-state dia gram, Labelthe new steady-state level of capital, the new steady-state lev el of out put, and new steady state level of investment

Answer 1