The industrial revolution was caused by several factors: 1) Population increase in Europe due to improved nutrition led to higher demand for goods; 2) Adam Smith's philosophy of laissez-faire capitalism removed barriers for factory owners; 3) A new banking system provided financing for industry. Effects included: 1) Cottage industries transitioned to factories using machines like the sewing machine; 2) Workers' movements like Chartism demanded political reforms; 3) Nationalism and imperialism fueled expansion overseas to find new markets and resources. The factory acts were passed to regulate child labor and working conditions.