It’s interesting to know…

• The economic history of the United States has its roots in European settlements in the 16^th, 17^th, and 18^th centuries. The American colonies progressed from marginally successful colonial economies to a small, independent farming economy, which in 1776 became the United States of America. In 230 years the United States grew to a huge, integrated, industrialized economy that makes up over a quarter of the world economy. The main causes were a large unified market, a supportive political-legal system, vast areas of highly productive farmlands, vast natural resources (especially timber, coal and oil), and an entrepreneurial spirit and commitment to investing in material and human capital. In addition, the US was able to exploit these resources due to a unique set of institutions designed to encourage exploration and extraction. As a result, the US’s GDP per capita converged on that of the UK, as well as other nations that it previously trailed economically. The economy has maintained high wages, attracting immigrants by the millions from all over the world.

• Great Depression in the United States, worst and longest economic collapse in the history of the modern industrial world, lasting from the end of 1929 until the early 1940s. Beginning in the United States, the depression spread to most of the world’s industrial countries, which in the 20^th century had become economically dependent on one another. The Great Depression saw rapid declines in the production and sale of goods and a sudden, severe rise in unemployment. Businesses and banks closed their doors, people lost their jobs, homes, and savings, and many depended on charity to survive. In 1933, at the worst point in the depression, more than 15 million Americans – one-quarter of the nation’s workforce – were unemployed.

• The US dollar is the unit of currency of the United States and is defined by the Coinage Act of 1792 to be between 371 and 416 grains (27.0 gram) of silver (depending on purity). It is divided into 100 cents. Taken over by the Congress of the Confederation of the United States on July 6, 1785, the US dollar is the currency used in many international transactions. Although US dollar is a fiat currency, several countries use it as their official currency, and in many others it is the de facto currency.

• The colloquialism buck is often used to refer to dollars of various nations, including the US dollar. This term, dating to the 18^th century, may have originated with the colonial fur trade. Greenback is another nickname originally applied specifically to the 19^th century Demand Note dollars created by Abraham Lincoln to finance the costs of the Civil War for the North. The original note was printed in black and green on the back side. It is still used to refer to the US dollar (but not to the dollars of other countries).

• The first institution with responsibilities of a central bank in the US was the First Bank of the United States, chartered in 1791 by Alexander Hamilton. Its charter was not renewed in 1811. In 1816, the Second Bank of the United States was chartered. Early renewal of the bank’s charter became the primary issue in the re-election of President Andrew Jackson. After Jackson, who was opposed to the central bank, was re-elected, he pulled the government’s funds out of the bank. Nicholas Biddle, President of the Second Bank of the United States, responded by contracting the money supply to pressure Jackson to renew the bank’s charter. The country entered into a recession, and the bank blamed Jackson’s policies. The bank’s charter was not renewed in 1836. From 1837 to 1862, in the Free Banking Era there was no formal central bank. From 1862 to 1913, a system of national banks was instituted by the 1863 National Banking Act. A series of bank panics, in 1873, 1893, and 1907 provided strong demand for the creation of a centralized banking system.

• The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act, it is a quasi-public (government entity with private components) banking system that comprises (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional privately-owned Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the US Treasury, each with its own nine-member board of directors; (4) numerous other private US member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils.

• In its role as the central bank of the United States, the Fed serves as a banker’s bank and as the government’s bank. As the banker’s bank, it helps to assure the safety and efficiency of the payments system. As the government’s bank, or fiscal agent, the Fed processes a variety of financial transactions involving trillions of dollars. Just as an individual might keep an account at a bank, the US Treasury keeps a checking account with the Federal Reserve through which incoming federal tax deposits and outgoing government payments are handled. As part of this service relationship, the Fed sells and redeems the US Government securities such as savings bonds and Treasury bills, notes and bonds. It also issues the nation’s coin and paper currency. The US Treasury, through its Bureau of the Mint and Bureau of Engraving and Printing, actually produces the nation’s cash supply and, in effect, sells it to the Federal Reserve Banks at manufacturing cost, currently about 4 cents per bill for paper currency. The Federal Reserve Banks then distribute it to other financial institutions in various ways. The Federal Reserve System’s role as a central bank is criticized for enabling the United States Federal Government to issue fiat currency.

Task IV. The words below are from the text. Fill the appropriate boxes with the words related to them:

Noun	Verb	Adjective
dominance
		managerial
	decline
		adaptable
	acquire
reserve
		organizational
	account
product
		private

Task V. Look through the text and pick out the words that are equivalent in meaning to the following definitions. Complete the puzzle and find a key word in the centre boxes:

					1
2
		3
				4
					5
						6
					7
					8
				9
						10

1. the price paid or required for acquiring, producing, or maintaining something, usually measured in money, time, or energy; expense or expenditure;

2. work or business of cultivating the soil, producing crops, and raising livestock;

3. an agreement under which a person borrows money to buy property, especially a house, and the lender may take possession of the property if the borrower fails to repay the money;

4. a plan or schedule adjusting expenses during a certain period to the estimated or fixed income for that period;

5. a person who buys goods or services for personal needs and not for resale or to use in the production of other goods for resale;

6. a gathering of people for buying and selling things, especially provisions or livestock;

7. a business venture or company;

8. the sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale;

9. productive work (especially physical work done for wages);

10. something that stimulates one to take action, work harder; encouragement.

Task VI. Match the verbs on the left with a suitable object on the right to make correct word-combinations. Say in what connection these collocations are mentioned in the text.

1. to be eroded by	a. serious economic problems
2. to face	b. additional shipping access
3. to stabilize	c. a limited role
4. to emphasize	d. a wide variety of businesses
5. to play	e. the creation of the EU
6. to provide	f. the importance of education and training
7. to stress	g. more authority
8. to include	h. financial markets
9. to pass and sign	i. private ownership
10. to delegate	j. a bill

Task VII. Check your understanding of the gist by saying whether these statements as True or False. Provide additional information or facts:

1. The US Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008 to help to solve some short-term economic problems.

2. The US economy is mainly based on a free enterprise system.

3. The American free enterprise system emphasizes government control.

4. The United States has a pure market economy, and the Government plays an important role in the national economy.

5. The factors of production are controlled by individuals in the United States.

6. The United States is rich in mineral resources and fertile farm soil in addition to a moderate climate.

7. The traditional managerial structure in America is based on a down-top chain of command.

8. Germany is an important growth market for US agricultural commodities.

9. There are different energy products among leading US categories of production.

10. The private non-good producing industries include establishments primarily engaged in growing crops, raising animals, harvesting timber.

Task VIII. Finish up the suggested statements using the information from the text above:

1. The US dominance has been eroded by … and …

2. … pushed the United States into a recession.

3. The interaction between competing … and … ultimately determines the price of goods and services.

4. The factors of production, which in the United States are controlled by individuals, fall into four major categories: …

5. Extensive waterways …

6. The traditional managerial structure in America is based on … It means that …

7. The US main industries are …

8. The US by far remains the world’s leading manufacturer by …

9. Service sector includes a wide variety of businesses: …

10. The leading US exports include …

Task IX. Re-read the text, paying more attention to the detail so as to answer the questions that follow:

1. What are the current problems the United States faces nowadays?

2. What measures have been taken to help the economy to recover?

3. What system is the US economy based on?

4. Why is the nation’s economy called a ‘consumer economy’ sometimes?

5. What is the role of the Government in the US economy? Does it provide any services and goods?

6. Is the country rich in mineral resources?

7. What is the level of unemployment in the USA?

8. What are the key sectors of American economy?

9. What are the American major crops and products?

10. What is the role of the US in global biofuels production?

Task X. Identify the key sentences in each paragraph. By doing this you’ll sum up the facts about:

1. the place of the USA among the world’s most competitive economies;

2. the real state of the US economy nowadays and measures that are taken to help to stabilize financial markets, create jobs and help the economy to recover;

3. the way the American economy is better described;

4. the way the economy works and the role and functions of the Government;

5. four major factors of production in the USA;

6. the US leading agricultural products;

7. the reasons why the USA is the leading manufacturer in the world and what its main industries are;

8. the largest sector in the American economy;

9. the reasons why the country is one of the most significant nations in the world when it comes to international trade;

10. the US main imports, exports and major trading partners.

Task XI. Check how well you know the economy of the United States of America by choosing the correct variant from the alternatives below:

1. The … Government is responsible for national defence, backs research that often leads to the development of new products, conducts space exploration, and runs numerous programs designed to help workers develop workplace skills and find jobs.

   1. Federal b. State c. city d. local

2. The Federal Government pursues the policy of laissez faire, a system of government that upholds the autonomous character of the economic order, believing that the Government should … the direction of economic affairs.

   1. control and intervene in c. not intervene in

   2. follow d. intervene as little as possible in

3. The US economy is based on a free … .

   1. entrepreneurial system c. enterprise system

   2. decision-making system d. private system

4. What are the ‘pillars’ of the US economic system?

   1. stable prices and economic growth

   2. private property, the price system and competition

   3. full employment and free enterprise

   4. environmental protection and providing public goods and services

5. The front (obverse) of the one dollar bill pictures …, the first President of the United States of America.

   1. George Washington c. Ronald Reagan

   2. Abraham Lincoln d. Theodore Roosevelt

6. The dollar used gold standard and/or silver standard from 1785 until 1975, when it became … .

   1. a national currency c. a fiat currency

   2. a physical currency d. a stable currency

7. … measures the dollar value of all goods and services produced in the US economy in one year.

   1. Value Added Tax c. Consumer Price Index

   2. Gross Domestic Product d. Interest Rate

8. A relatively independent central bank, known as …, was formed in 1913 to provide a stable currency and monetary policy.

   1. the Federal Reserve c. the New York Stock Exchange

   2. The Chicago Board of Trade d. the Federal Bank

9. … is the first permanent home of the New York Stock Exchange.

   1. Downing Street b. Wall Street c. Main Street d. Times Square

10. In the early 20^th century, the automobile companies of Ransom E. Olds and Henry Ford promoted … .

    1. the patent for the telephone c. nuclear weapons

    2. the phonograph d. the assembly line

11. By 2009, the Ford Motor Company had become the second largest automaker in Europe (only behind …), with large markets in the United Kingdom and Germany and sales that exceeded those in the United States.

    1. General Motors b. Toyota c. Volkswagen d. Chrysler

12. … is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide as of 2007.

    1. Oriflame Cosmetics S.A. c. Avon Products Inc.

    2. The L’Oreal Group d. Max Factor & Company

13. The … company, which distributes its soft drinks around the world, began in Atlanta in 1886, when a pharmacist John Pemberton invented a new drink.

    1. McDonald’s b. Coca-Cola c. Levi Strauss d. Pepsi

14. Although US workers have long had the right to organize, only … of them were labour union members in 2006.

    1. 50 % b. 32 % c. 5 % d. 12 %

15. The groups of workers getting the highest average wages, more than $80.000 a year, have jobs in … .

    1. agriculture c. management and law

    2. food preparation and service d. construction

16. As a proportion of GDP, public health care spending in the United States is … in most other large Western countries.

    1. the same as b. smaller than c. not so large as d. larger than

17. Americans are convinced that … promotes economic growth, social stability, and democracy in individual countries and that it advances world prosperity, the rule of law, and peace in international relations.

    1. trade

    2. free market system

    3. implementation of new technologies

    4. spirit of enterprise

18. The United States supported trade … and was instrumental in the creation of the General Agreement on Tariffs and Trade (GATT), an international code of tariff and trade rules.

    1. tightening b. limitation c. liberalization d. cancellation

19. … is an international organization (founded in 1945) whose stated aims are to facilitate cooperation in international law, international security, economic development, social progress, human rights, and achieving world peace.

    1. The United Nations c. The World Health Organization

    2. The League of Nations d. The Group of 7

20. The North American Free Trade Agreement (NAFTA) is a trilateral trade bloc in North America created by the governments of the United States, … .

    1. Canada and Brazil c. France and the UK

    2. Brazil and Mexico d. Canada and Mexico

21. The United States is the … largest producer of oil in the world, as well as its largest importer.

    1. second b. first c. third d. fourth

22. American agriculture increasingly has become … , a term created to reflect the big, corporate nature of many farm enterprises in the modern US economy.

    1. an ‘agribusiness’ c. the ‘Garden of America’

    2. a ‘family farm’ d. an ‘agrimarket’

23. This region is known as the nation’s ‘breadbasket’ because of its abundant production of oats, wheat, and corn.

    1. the West c. the Midwest

    2. the Middle Atlantic d. the East

24. … is the nation’s most populous state, and is famous for its movie and high-technology industries.

    1. California b. Florida c. Hawaii d. Michigan

25. To meet its needs, the USA must import … .

    1. coal and copper c. chemicals

    2. gold and silver d. iron ore and petroleum

26. What are the country’s major export partners?

    1. Canada and Mexico c. the EU countries

    2. China and Russia d. BRIC countries

27. … was the name that US President Franklin D. Roosevelt gave to a complex package of economic programs he initiated with the goal of giving relief to the unemployed, reform of business and financial practices, and promoting recovery of the economy during The Great Depression.

    1. The Great Deal b. The New Deal c. NAFTA d. Laissez Faire

28. In February 2009, President Barack Obama signed his hard-fought economic … plan, which includes a combination of measures designed to maximize its political support, including tax cuts, additional spending on infrastructure and aid to the US states, which are having their own budget difficulties.

    1. recovery b. crisis c. stimulus d. investment

29. Economic … is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders.

    1. ‘globalization’ c. recession

    2. ‘Americanization’ d. expansion

30. An economists’ proverb says that when the United States sneezes, the rest of the world … .

    1. catches a cold c. stays in bed

    2. sneezes too d. gives a sigh of relief

Task XII. Translate the following sentences into English using the vocabulary of the text:

1. Экономический кризис в США, так называемая «Великая депрессия», характеризовался резким спадом производства, ростом безработицы и инфляции.

2. Федеральная резервная система США контролирует объем денежной массы в стране и оказывает колоссальное влияние на финансовые рынки.

3. Ведущее место в сельском хозяйстве США занимает разведение крупного рогатого скота и домашней птицы, производство яиц и молочных продуктов, выращивание зерновых, сои, овощей и фруктов.

4. В США, помимо железа, добывают свинец, медь, уран, алюминий, цинк, вольфрам, золото и серебро, а из неметаллического сырья – серу, калий, известняк, песок, гравий и др.

5. США потребляют 25% всей мировой энергии, значительно больше, чем любая другая страна мира.

6. Сфера услуг – крупнейший сектор экономики США, который включает множество различных отраслей и профессий.

7. Добывающие отрасли хозяйства играют жизненно важную роль в обеспечении экономического роста.

8. Американскую экономику следует отнести к экономической системе смешанного типа, в которой государство играет важную роль наряду с частным предпринимательством.

9. США – крупнейший мировой покупатель (13% мирового импорта) и продавец (18% мирового импорта).

10. США, Канада и Мексика в 1994 г. заключили Североамериканское соглашение о свободе торговли, облегчившее взаимообмен товарами, услугами и капиталом между тремя странами.

C. Follow-up Activities

Task XIII. In groups discuss the following problems and then share your major conclusions. Give extensive arguments to prove your position.

1. Discussions of US economic stimulus plans are heating up. The US Government is prepared to spend billions to the economy to regain its footing, but questions remain about where the money should be best applied, what sectors should receive aid – and what the likely outcomes will be. What would be your decision?

2. American prosperity has attracted worldwide attention and imitation. There are several key reasons why the US economy has been so successful and other reasons why, in the 21^st century, it is possible that some other industrialized nations will surpass the US standard of living. What are they?

3. A guiding principle of the US economy, dating back to the colonial period, has been that individuals own the goods and services they make for themselves or purchase to consume. Individuals and private businesses also control the factors of production. They own buildings and equipment, and are free to hire workers, and acquire things that businesses use to produce goods and services. Individuals also own the businesses that are established in the United States. What are the strengths and weaknesses of this system?

4. Greater world trade and cooperation offer an enormous range of mutually beneficial activities. Trading with other countries inevitably increases opportunities for travel and cultural exchange, as well as business opportunities. In a very broad sense, nations that buy and sell goods and services with each other also have a greater stake in other forms of peaceful cooperation, and in seeing other countries prosper and grow. On the other hand, global interdependence also raises major problems. What are they?

Task XIV. Comment on the quotations:

1. “In today’s knowledge-based economy, what you earn depends on what you learn.” Bill Clinton, 42^nd US President

2. “If we only have great companies, we will merely have a prosperous society, not a great one. Economic growth and power are the means, not the definition, of a great nation.” Jim Collins, Business Author and Theorist

3. “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it”. Ronald Reagan, 40^th US President

D. Optional Reading