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international exchange rates, United States Economy, different types of businesses, social institutions, Gross Domestic Product
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United States Economy, all of the ways goods and services are produced, distributed, and consumed by individuals and businesses in the United States. The U.S. economy is immense. In 2005 it included more than 295 million consumers and more than 20 million businesses. U.S. consumers purchase more than $6 trillion of goods and services annually, and businesses invest over a trillion dollars more for factories and equipment. In addition to spending by private households and businesses, government agencies at all levels (federal, state, and local) spend roughly an additional $2 trillion a year. In total, the annual value of all goods and services produced in the United States, known as the Gross Domestic Product (GDP), was $12.5 trillion in 2005.
Those levels of production, consumption, and spending make the U.S. economy by far the largest economy the world has ever known—despite the fact that some other nations have far more people, land, or other resources. Through most of the 20th century and continuing into the 21st century, U.S. citizens also enjoyed the highest material standards of living in the world. Some nations have higher per capita (per person) incomes than the United States. However, these comparisons are based on international exchange rates, which set the value of a country’s currency based on a narrow range of goods and services traded between nations. Most economists agree that the United States has a higher per capita income based on the total value of goods and services that households consume.
American prosperity has attracted worldwide attention and imitation. There are several key reasons why the U.S. economy has been so successful and other reasons why, in the 21st century, it is possible that some other industrialized nations will surpass the U.S. standard of living. To understand those historical and possible future events, it is important first to understand what an economic system is and how that system affects the way people make decisions about buying, selling, spending, saving, investing, working, and taking time for leisure activities.
This article consists of ten major sections. The first section of this article discusses how individual people, business and labor organizations, and social institutions make up the U.S. economic system. Next, the article discusses the production of goods and services. The third section describes the different types of businesses that operate in the United States, such as proprietorships, partnerships, and corporations. It also discusses how entrepreneurs acquire and organize the funding and resources needed to run a business.
Capital, savings, and investment are taken up in the fourth section, which explains how the long-term growth of any economy depends upon the relationship between investments in capital goods (inventories and the facilities and equipment used to make products) and the level of saving in that economy. The next section explains the role money and financial markets play in the economy. Labor markets, the topic of section six, are also extremely important in the U.S. economy, because most people earn their incomes by working for wages and salaries. By the same token, for most firms, labor is the most costly input used in producing the things the firms sell.
The role of government in the U.S. economy is the subject of section seven. The government performs a number of economic roles that private markets cannot provide. It also offers some public services that elected officials believe will be in the best interests of the public. The relationship between the U.S. economy and the world economy is discussed in section eight. Section nine looks at current trends and issues that the U.S economy faces at the start of the 21st century. The final section provides an overview of the kinds of goods and services produced in the United States.
For younger readers
Andryszewski, Tricia. The Environment and the Economy: Planting the Seeds for Tomorrow's Growth. Raintree Steck-Vaughn, 1996. In the Modern Industrial World series, for readers in grades 5 to 8.
Collier, Christopher, and James L. Collier. The Rise of Industry: 1860-1900. Marshall Cavendish, 2000. For readers in grades 5 to 8.
Sandak, Cass R. The United States. Millbrook, 1995. For readers in grades 5 to 8.
USA Political and Economic History
Adams, James Truslow, and others, eds. Dictionary of American History. 8 vols. Rev. ed. Scribner, 1976-1978. 2 vol. Supplement , 1996. Articles by experts; concise edition published in 1983.
Boorstin, Daniel J. The Americans. 3 vols. Random House, 1958-1973, 1984-1985. How Europeans became Americans.
Commager, Henry Steele, and Milton Cantor. Documents of American History. 10th ed. Prentice Hall, 1988. Texts of basic documents through the mid-1980s.
Faragher, John Mack, ed. The American Heritage Encyclopedia of American History. Holt, 1998. Current source with almost 3,000 entries and numerous photos.
Foner, Eric, and John A.Garraty, eds. The Reader's Companion to American History. Houghton, 1991. Substantial alphabetical entries on full range of topics.
Graham, Sara Hunter. Woman Suffrage and the New Democracy. Yale University Press, 1997. Recounting of the reorganization of the movement.
Hofstadter, Richard. The American Political Tradition, and the Men Who Made It. 2nd ed. Knopf, 1973. Reprint, Vintage, 1989. Analyzes the careers of Jefferson, Jackson, Calhoun, Bryan, the Roosevelts, Wilson, Hoover, and others.
Jenkins, Philip. A History of the United States. St. Martin's, 1997. General survey with emphasis on culture and religion.
Johnson, Paul. A History of the American People. HarperCollins, 1998. History by a British journalist.
Morison, Samuel Eliot. A Concise History of the American Republic. 2nd ed. Oxford, 1983. Abbreviated version of The Growth of the American Republic.
Morison, Samuel Eliot. The Growth of the American Republic. 2 vols. 7th ed. Oxford, 1980. Classic on American history.
Morris, Richard B., and Jeffrey B. Morris, eds. Encyclopedia of American History. 7th ed. HarperCollins, 1996. Chronological, topical, biographical.
Purvis, Thomas L. A Dictionary of American History. Blackwell, 1995. Quick reference with 3,000 entries; mostly facts, little interpretation.
Schlesinger, Arthur M., Jr. The Cycles of American History. Houghton Mifflin, 1986. Strong opinions and witty reflections on historical events and patterns.
Virga, Vincent, and Alan Brinkley. Eyes of the Nation: A Visual History of the United States. Knopf, 1997. Numerous photos and illustrations.
Watkins, T. H. The Great Depression: America in the 1930s. Little, Brown, 1993. Companion to a PBS television series.
Williams, T. Harry. The History of American Wars: From 1745 to 1918. Knopf, 1981. Louisiana State University Press, 1985. Political, social, and economic aspects of military experience.
Wolock, Nancy. Women and the American Experience. 2 vols. McGraw-Hill, 1994. Draws on best recent research to develop a balanced history of American women; concise edition published in 1996.
Zinn, Howard. A People's History of the United States. Rev. ed. HarperPerennial, 1995. History from the perspective of the poor and disadvantaged.
United States (Economy)
Anderson, Rolf. Atlas of the American Economy. Congressional Quarterly, 1994. Provides a framework for understanding the U.S. economy today.
Atack, Jeremy, and Peter Passell. A New Economic View of American History from Colonial Times to 1940. Norton, 1994. A clearly written introduction to American economic history for the non-specialist.
Beard, Charles. An Economic Interpretation of the Constitution of the United States. Reprint, Transaction, 1998. A classic work that assesses the economic aims of the framers of the Constitution, first published in 1913.
Cohen, Lizabeth. A Consumers' Republic: The Politics of Mass Consumption in Postwar America. Knopf, 2003. A professor of American Studies at Harvard University examines the effects of mass consumerism on social, economic, and cultural life in the United States since World War II.
Gordon, John Steele. An Empire of Wealth: The Epic History of Economic Power. HarperCollins, 2004. Lively narrative of innovation and invention.
Heilbroner, Robert, and Aaron Singer. The Economic Transformation of America: 1600 to the Present. 4th ed. Harcourt Brace College, 1998. A history of economic conditions and industrialization.
Hughes, Jonathan, and Louis P. Cain. American Economic History. 6th ed. Addison-Wesley, 2002. A textbook history of the U.S. economy.
Stein, Herbert, and Murray Foss. The Illustrated Guide to the American Economy. Rev. 3rd ed. American Enterprise Institute for Public Policy Research, 1999. Helpful guide for those who want to better understand economic news.
Watts, Michael, B.A., M.A., Ph.D. Professor of Economics and Director of the Center for Economic Education, Purdue University. Co-author of Voluntary National Standards for K-12 Economic Education. Co-editor of Teaching Undergraduate Economics: Alternatives to Chalk and Talk.
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