China was the largest economy for centuries
because everyone had the same type of economy—subsistence—and so the country with
the most people would be economically biggest.
Then the Industrial Revolution sent the West
on a more prosperous path. Now the world is
returning to a common economy, this time technology- and information-based, so once again
population triumphs.
a. Why was China the world’s largest economy
until 1890?
b. Why did the United States surpass China in
1890 to become the world’s largest economy?
How Potential GDP Grows (Study Plan 22.3)
Use the tables in the next column to work Problems
5 to 7.
The tables describe an economy’s labour market and
its production function in 2014.