The Economy Today Essay Research Paper The

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The Economy Today Essay, Research Paper The Economy Today The United States has been the world’s leading industrial nation since early in the 20th century. Until the second half of the 19th century, agriculture remained the dominant U.S. economic activity. After the Civil War ended in 1865, great advances were made in the production of basic industrial goods. By the time of World War I (1914-1918), exports of manufactured goods had become more important than the export of raw materials; as manufacturing grew, agriculture became increasingly mechanized and efficient, employing fewer and fewer workers. The most important development in the economy since World War II (1939-1945) has been the tremendous growth of service industries, government, professional services, trade, and

financial activities. Today, service industries make up the most important sector of the economy, employing almost three-fourths of the workforce. Industry employs approximately 23 percent of the labor force and agriculture, forestry, and fishing about 3 percent of the workers. Beginning in the 1930s, the government of the United States played an increasingly active role in the economy. Even though the U.S. economy in the 1990s was based on free enterprise, the government regulated business in various ways. Some government regulations were drawn up to protect consumers from unsafe products and workers from unsafe working conditions; others were designed to reduce environmental pollution. Government also exerts tremendous influence on the economy through the jobs it provides and

the money it spends. Government employs 15 percent of all the workers in the nation. The federal budget for fiscal year 1998-1999 included estimated expenditures of $1.67 trillion, or about 20.0 percent of the period’s estimated gross domestic product (GDP.) Revenue was estimated at $1.66 trillion, or 19.9 percent of GDP. That left a deficit of about $10 billion. The United States had consistently recorded annual budget deficits of $100 billion or more since the early 1980s; the amount of the deficit began declining in the early 1990s. In the mid-1990s the United States led all nations of the world in the yearly value of its economic production. The nation’s annual GDP was $7.85 trillion in 1997. With a per-capita GDP of $29,400, the people of the United States had one of the

world’s highest standards of living. When the effect of inflation is not considered, GDP has increased at a rather high rate, increasing nearly seven fold between 1970 and 1995. When the impact of inflation is taken into account, however, the rate of economic growth has been much less. During the period from 1970 to 1995, the change in GDP, based on dollars adjusted for inflation, was 198 percent. GDP adjusted for inflation gives a more accurate picture of the performance of the economy than the unadjusted figure. The U.S. economy consists of three main sectors-the primary, secondary, and tertiary. Primary economic activities are those directly extracting goods from the natural environment, including agriculture, forestry, fishing, and mining. The primary sector usually

contributes about 2 percent of annual GDP. Secondary economic activities involve processing or combining materials into new products, and include manufacturing and construction. Each year the secondary sector accounts for approximately 26 percent of GDP. Tertiary economic activities involve the output of services rather than goods. Examples of tertiary activities include wholesale and retail trade, banking, government, and transportation. The tertiary is the most important sector by far and accounts for almost 72 percent of annual GDP. Free-Market Economy, economic system in which individuals, rather than government, make the majority of decisions regarding economic activities and transactions. Individuals are free to make economic decisions concerning their employment, how to