The Economy of the United States of America

A. Pre-Reading Activities

Task I. Make sure you know the following words and word combinations:

acquire (v) – приобретать, достигать

biofuel (n) – биотопливо

cereals (n) – хлебные злаки

consumption (n) – потребление

copper (n) – медь

corn (n) – зерно, (Am.) кукуруза, маис

costs (n) – затраты, издержки

crude oil – неочищенная нефть

depreciate (v) – обесцениваться, падать в цене

discourage (v) – препятствовать, мешать

downturn (n) – уменьшение, спад

enterprise (n) – предпринимательство, промышленное предприятие, предприимчивость

entrepreneurship (n) – предпринимательство

erode (v) – разъедать, разрушать

extraction (n) – добывание, извлечение

grain (n) – зерно, хлебные злаки

layoff (n) – приостановка или прекращение производства; увольнение из-за отсутствия работы; приостановка производства

lead (n) – свинец

leasing service – лизинговая услуга

lumber (n) – (Am.) пиломатериалы, бревна

maize (n) – кукуруза, маис

mining (n) – горное дело

mortgage (n) – заклад, ипотека

overtake (v) – догонять, перегонять

petroleum (n) – нефть, бензин

pork (n) – свинина

poultry (n) – домашняя птица

profit (n) – польза, выгода; прибыль, доход

rapid (adj) – быстрый, скорый

soybeans (n) – соевые бобы

stagnation (n) – застой, застойность

threefold (adj) – утроенный, тройной

timber (n) – лесоматериалы, строевой лес

warehousing (n) – хранение, размещение на складе

wheat (n) – пшеница

Task II. Mind the following proper nouns and abbreviations:

BRIC – Brazil, Russia, India, China

CIA – central intelligence agency

Troubled Asset Relief Program – программа выкупа проблемных активов

B. Reading and Comprehension Activities

Task III. Go through the text and check your understanding by doing the tasks that follow:

The United States of America has the world’s largest and most technologically powerful economy in the world. According to the CIA World Factbook, 2008 GDP is believed to be $14.58 trillion. This is two times the size of the next largest economy, Japan.

US dominance has been eroded however by the creation of the European Union common market, which has an equivalent GDP of approximately $15 trillion, and by the rapid growth of the BRIC economies, in particular China, which is forecast to overtake the US in size within 30 years.

Despite the country’s position as the most powerful economy, it now faces many serious economic problems. Some of these are short-term, but some of them reflect an underlying weakness. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. The merchandise trade deficit reached a record $847 billion in 2007, but declined to $810 billion in 2008, as a depreciating exchange rate for the dollar against most major currencies discouraged US imports and made US exports more competitive abroad. The global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit pushed the United States into a recession. To help to stabilize financial markets, the US Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008. The Government used some of these funds to purchase equity in US banks and other industrial corporations. In January 2009 the US Congress passed and President Barack Obama signed a bill providing an additional $787 billion fiscal stimulus – two thirds on additional spending and one third on tax cuts – to create jobs and to help the economy recover.

The American economy is better described as a ‘mixed’ economy, with the Government playing an important role along with private enterprise. The American free enterprise system emphasizes private ownership. Private businesses produce most goods and services, and almost two thirds of the nation’s total economic output goes to individuals for personal use (the remaining one third is bought by the Government and business). The consumer role is so great, in fact, that the nation is sometimes characterized as having a ‘consumer economy’.

Producers decide which goods and services to make and sell, and how much to ask for those products. At the same time, consumers decide what they will purchase and how much money they are willing to pay for different goods and services. The interaction between competing producers, who attempt to make the highest possible profit, and consumers, who try to pay as little as possible to acquire what they want, ultimately determines the price of goods and services.

In a market economy, the Government plays a limited role in economic decision making. However, the United States does not have a pure market economy, and the Government plays an important role in the national economy. It provides services and goods that the market cannot provide effectively, such as national defence, assistance programs for low-income families, and interstate highways and airports. The Government also provides incentives to encourage the production and consumption of certain types of products, and discourage the production and consumption of others; sets general guidelines for doing business and makes policy decisions that affect the economy as a whole; establishes safety guidelines that regulate consumer products, working conditions, and environmental protection.

The factors of production, which in the United States are controlled by individuals, fall into four major categories: natural resources, labour, capital, and entrepreneurship.

The United States is rich in mineral resources and fertile farm soil, and it is blessed with a moderate climate. The country has reserves of coal, copper, lead, phosphates, potash, silver, zinc, petroleum, natural gas, timber, etc. The US has the world’s largest coal reserves with 491 billion short tons accounting for 27% of the world’s total. It also has extensive coastlines on both the Atlantic and Pacific Oceans, as well as on the Gulf of Mexico. Rivers flow from far within the continent and the Great Lakes provide additional shipping access. These extensive waterways have helped to shape the country’s economic growth over the years and helped to bind America’s 50 individual states together in a single economic unit.

Labour converts natural resources into goods. The number of available workers and their productivity help to determine the health of an economy. Of the 304 million people living in the US in 2008, nearly 155.2 million adults were working or actively looking for work. Of this total in 2008, 0.6% were employed in farming, forestry, and fishing, 22.6% in manufacturing, extraction, transportation, and crafts, 35.5% in managerial, professional, and technical services, 24.8% in sales and office, 16.5% in other services. Labour-force quality continues to be an important issue. Today, Americans consider ‘human capital’ a key to success in numerous modern, high-technology industries. As a result, government leaders and business officials increasingly stress the importance of education and training to develop workers with the kind of nimble minds and adaptable skills needed in new industries such as computers and telecommunications.

In February 2009 the number of unemployed persons increased to 12.5 million and the unemployment rate rose to 8.1%. In key industries – manufacturing, financial services and retail – layoffs have accelerated so quickly as to suggest that many companies are abandoning whole areas of business.

Capital includes buildings, equipment, and other intermediate products that businesses use to make other goods or services. Businesses have additional capital investments in their inventories of finished products, raw materials, and partially completed goods.

But natural resources, labour and capital account for only part of an economic system. These resources must be organized and directed as efficiently as possible. In the American economy, managers, responding to signals from markets, perform this function. The traditional managerial structure in America is based on a top-down chain of command; authority flows from the chief executive in the boardroom, who makes sure that the entire business runs efficiently, through various lower levels of management responsible for coordinating different parts of the enterprise, down to the foreman on the shop floor. Many enterprises nowadays continue to operate with this traditional structure, but others have taken changing views on management. Facing heightened global competition, American businesses are seeking more flexible organisation structures, especially in high-technology industries that employ skilled workers and must develop, modify, and even customize products rapidly. As a result, many companies have ‘flattened’ their organisational structures, reduced the number of managers, and delegated more authority to interdisciplinary teams of workers.