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The US Economy

	Economy General USA Economy in Brief. Economy: USA Facts in Brief. --- Collection of facts on the U.S. economy. US Economy --- "A collection of facts on the United States economy, including information on state and federal finance, business and technology, industries, trade, and more." The Business of America: agriculture, mass production, the labor movement, and the economic system. --- The link provides general information on the US economy. US Economy. --- The chapters of this link are: Basic Conditions and Resources, Small Business and Corporation, Foreign Trade, Monetary and Fiscal Policy, The Stock Market, Labor, Agriculture, E-Commerce. There are many additional links at the bottom of the page. An Outline of the U.S. Economy. --- The page leads to a comprehensive site on the topic. To read all the pages follow the links on the left side of the site after opening. An Outline of the American Economy (1991). --- Another thorough explanation of the US economy. Youtube videos on 1929 Stock Market Crash. --- Short documentaries on the most dramatic event in the US economic history. Economic Issues Full Coverage: U.S. Economy. --- The page is provided by Yahoo! It has many links to current issues. It is updated 24 hours a day. VOA Special English > Economy. --- A slow speech tempo, updates on the economy, downloadable audio files! The New York Times > Business. --- Everyday economic issues on-line. To read articles you may need to subscribe. Why the US needs a recession. --- The article gives the answer - it's "a necessary corrective". What's Up -- or Down -- With Commodity Prices? Why Oil Continues Its Climb. US Economy: Home Foreclosures, Late Payments Rise US Central Bank Chief Says Economic Challenges are Formidable. Bush Says US Economy Not in Recession. Tax Time in America. When Companies Choose a Private Life. Getting Started as an Investor. No Takeover for Fannie Mae, Freddie Mac.

The Treasure Hunt on the Role of Government in the Economy

Introduction

At the turn of the 20th century, the 12 largest companies in America were (in alphabet order): the American Cotton Oil Company, American Steel, American Sugar Refining Company, Continental Tobacco, Federal Steel, General Electric, National Lead, Pacific Mail, People's Gas, Tennessee Coal and Iron, U.S. Leather and U.S. Rubber. Ten of the twelve were natural resources companies. The economy was a natural resource economy, ..." (American Studies Journal Nov. 1996: 32)

t the turn of the 21st century, among the US big and successful businesses there are many IT companies like Apple Computer, Dell, Google, HP, Microsoft, Motorola, ... They are examples of the New Economy - the term was coined in the mid 90s last century in the USA to describe growth of IT companies - which increases its share year by year. Nevertheless the natural resource companies still hold the lead as long as the industry uses oil, gas, coal to provide the needs of other industries and the public.

Despite the trends and new names, the USA economy remains a market economy where the value of a product is calculated by a simple scheme - demand and offer. As a result the USA is often addressed as a consumer society where money spending is a part of every day life.

But the economic slow down has made many people tighten their budgets. More and more Americans have to turn to cars with better gas mileage and stores like Wall Mart for groceries.

• The article is for optional reading:
  • "School, and Family Budgets Under Pressure."

To resolve the economic challenges President G.W. Bush signed the economic stimulus package which is also known as "tax rebates". By that plan the government returned "more than $150 billion back to American families and businesses" in the year 2008. More consumer spending and new equipment purchases by businesses were expected after the tax rebates reached Americans.

Another move by the government to support the US economy was made in July 2008 when Congress approved a "bailout" (rescue) of two major mortgage companies, Fannie Mae and Freddie Mac.

• The articles are for optional reading:
  • "Bush Offers Plan to Save Fannie, Freddie."
  • "Government Steps In To Rescue Fannie, Freddie."
  • "US Announces Plan to Support Mortgage Giants."
  • Watch video files on the far right of the page.

Later on September 07, 2008 the government took over the mortgage giants to avert further deterioration of the housing market.

• The articles are for optional reading:
  • "Too Big to Fail, the Next Step: US Seizes Fannie Mae, Freddie Mac."
  • "US Government Takes Over Two Major Financial Firms."
  • "Government Taking Over Fannie, Freddie."
  • "Global Nightmare: If Fannie And Freddie Had Failed."
  • "Feds Take Over Fannie Mae and Freddie Mac."
  • "US rescues giant mortgage lenders."

Question

As you see the government has ways to correct the economy when needed. Some critics call it socialism and strongly oppose such interventions. Here is the Question to answer:

• What is the government's role in the economy?

Follow the Process and Resources below to know more about regulatory functions of the US government in the economy.

Process and Resources

Please, feel free to use one of the online dictionaries or one at hand.

Here are the instructions to use when studying the role of government in the economy.

1. BACKGROUND. The whole group should read the article below and answer the questions:
   • What does the French term "laissez-faire" [,lesei 'fer] mean?
   • Government regulation of private industry can be divided into two categories. What are they?
   • When did the US government's intervention¹ in the economy begin and how did it evolve?
   • Why does the government think that big companies might become a threat to the economy?
   • Why do you think the government lifted most of its regulations that dealt with aviation, trucking, and railroads at the end of 1970s?
   • How did the government diregulate telecommunications?
   • One of the regulations related to banking is deposit insurance. What is it like?
   • Protecting the environment is an example of government intervention in the economy for a social purpose. How does this regulatory function work?
     • Read the text "The Role of Government in the Economy."
2. GOVERNMENT'S TASKS IN THE ECONOMY. The whole group should study the article below and answer the question:
   • What are the government's tasks in the economy?
     • Read the text "The Role of Government," April 07, 2008. By America.gov.
3. REGULATORY AGENCIES. The whole group should read the article below and answer the question:
   • What laws and agencies regulate the economy?
     • Read the text "Government Role in Business." By Answers.com.
4. INDIVIDUAL ACTIVITY. This task is to be performed individually.
   • Using a search engine - Google, Yahoo! or Bing - find a recent example that reveals the government's [regulatory] role in the economy and be ready with a small presentation. Make sure your example differs from other ones and answers "Wh" and "How" questions (what, where, when, why and how).
     • Click to open some examples/hints. Click to close the examples/hints.
       • Microsoft.
       • Tomatoes [salmonella outbreak].
       • Raising/lowering interest rates by the Federal Reserve.
       • Indy Mac.
       • Bear Stearns.
       • AIG.
       • $700 billion bailout of Wall Street.
       • Car industry (Ford, Chrysler, GM) bailout.
       • ...

Big Question

Having studied the regulatory functions of the U.S. government, you are expected to come up with your answer to the Big Question:

• What would happen in the economy if the government did not have regulatory rights?

Conclusion

nitiated during the industrial revolution and meant to protect the competitiveness among the businesses and later widened during and after the Great Depression to guarantee the workforce and customer security, the government's role in the economy has been significant.

This importance tends to increase during economic hardships. Examples with Fannie Mae and Freddie Mac are a proof of that. The government backed up these mortgage companies to ensure investors and the public that the housing market is secure.

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¹Intervention - involvement in a situation in order to improve or help it. By Oxford Advanced Learner's Dictionary.

Antitrust - [only before noun] (of laws) preventing companies or groups of companies from controlling prices unfairly. By Oxford Advanced Learner's Dictionary

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News Feeds

Here are the news feeds provided by some of the US mass media. You can use these resources for a five minute news warm-up at the beginning of our class. Click the headline to open the whole article in a new window.

Mortgage Crisis Video

Fannie Mae and Freddie Mac bail out. July 2008.

Fannie Mae and Freddie Mac takeover by Government. September 07, 2008.