Question

1. Technology and the Industrial Revolution Global Income, Maddison Historical Estimates Ind gh 0500 1000 Year 1500 2000 Suppose Britain's economy in the year 1500 is described by the following production function and parameters: s= 0.2 δ 0.1 The capital stock is K15001 1.1. Fil in the following table, which will give us a sense of how Britain's economy evolved in the centuries before the Industrial Revolution. Year Capital K GDPY Investmentl Depreciation Dt GDP growth 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 technology 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)?

Answer 1