- •Introduction An economy driven by competition
- •The u.S. Economy Today
- •Vocabulary
- •Exercises
- •The challenges of this century
- •Vocabulary
- •Basic ingredients of the u.S. Economy
- •Vocabulary
- •Exercises
- •A mixed economy: the u.S. System
- •Vocabulary
- •Exercises
- •Government’s role in the u. S. Economy
- •Direct services
- •Regulation and control
- •Stabilization and growth
- •Direct assistance
- •Vocabulary
- •Exercises
- •The passive use of –able.
- •Fluctuations in economic activity the business cycle
- •The great depression
- •Vocabulary
- •Exercises
- •Form adjectives from these nouns:
- •Form verbs from these adjectives:
- •Form nouns from these verb-adjective pairs:
- •6 From small business to the corporation the sole proprietor
- •The business partnership
- •Franchising and chain stores
- •Large corporations: advantages and disadvantages
- •How corporations raise capital
- •The threat of monopoly
- •Vocabulary
- •Exercises
- •7 Stocks, commodities and markets
- •The importance of dividends
- •The stock exchanges
- •Over-the-counter stocks
- •Buying stock on margin
- •Commodities futures
- •Market dynamics
- •Vocabulary
- •Exercises
- •8 Monetary and fiscal policy
- •Money in the u.S. Economy
- •The u.S. Money supply
- •The federal reserve system
- •Fiscal policy
- •Vocabulary
- •Exercises
- •9 Taxation
- •The power to tax
- •Current federal taxes
- •Taxing for nonrevenue purposes
- •Nontax revenue and borrowing
- •Vocabulary
- •Exercises
- •656099, Г. Барнаул, пр-т Ленина, 46
The business partnership
When a proprietor wants to expand a business, one way to do so is to form a partnership, a business formed for profit by two or more co-owners. The rights and duties of a partnership are regulated by laws of the state where it is formed and by a legal agreement entered into by the co-owners. Usually an agreement specifies the amount of money each is investing and the duties each partner assumes. A partnership agreement also may provide for a "silent partner" who does not take part in the management, but who invests money in the business.
The partnership has the advantage of pooling managerial talent. One partner may be qualified in production, another in marketing. The partnership, like individual ownership, is exempt from most of the reporting that the government requires of corporations. Furthermore, it has a favorable tax position when compared with the corporation. Federal taxes are paid by individual partners on their share of earnings; beyond that the business is not taxed.
A major disadvantage of the partnership is that each member is liable for all the debts of the partnership; the act of any partner is legally binding upon all the others. If one partner takes a large amount of money from the business and squanders it, the others must pay the debt. Partnerships suffer another major disadvantage: decision-making is shared. If partners have serious and constant disagreements, the business is bound to suffer.
Nonetheless, the partnership remains a vital part of the overall business economy.
Franchising and chain stores
Franchising, a practice adaptable to small business, has increased greatly in recent years. A common practice in the restaurant business, franchising combines the economic efficiencies of the large corporation with the benefits of local ownership. In this transaction, a large company allows an individual or small group of entrepreneurs to use its name (often a distinct advertising advantage) and sometimes its products in exchange for a percentage of the profits. The entrepreneur, who is usually not an employee of the parent company, is responsible for the management and operation of one or several units of the larger chain. The individual owner or owners must also assume most of the risks connected with the enterprise.
Franchising has costs as well as benefits for the economy. The rise of the chain store has inhibited the development of single proprietorships and partnerships. Chain stores use mass methods buying in large quantities, selling a high volume and stressing self-service that make it possible to sell goods at lower prices than small-owner stores. Chain supermarkets, for example, using lower prices to attract customers, have driven out many independent small grocers.
Nonetheless, many independents do survive. Some individual proprietors join forces with others to form chains of independents or cooperatives. They pool their buying power or become independent franchises, and they often serve specialized or "niche" markets.