Question

US Economic History

Please Type

Draw a graph showing the impact of increasing land available in the West from federal land sales. This will result in a reallocation of labor from the East to the West (modelling westward migration). A complete answer should show the marginal product of labor, the level of rents in east and west, and the amount of labor in East and West (both before and after) clearly shown.

Answer 1

The workings of the U.S. economy are complex and often mysterious, even to economists.The economy runs on three major sectors: consumers, businesses, and government. Consumers earn money and exchange much of it for goods and services from businesses. . Both consumers and businesses fund the government sector, which spends and transfers money back into the system.

The banking system plays a crucial role in the economy by providing the means for all sectors to save and borrow money.Atlast, there are the stock markets, which allow consumers to invest their money in the nation's businesses—an enterprise that further fuels economic growth for all sectors. Thus, the U.S. economy is a circular system based on interdependent relationships in which massive amounts of money change hands.

Defining the U.S. Economy

The term market economy describes an economy in which the forces of supply of goods dictate the way in which goods and resources are allocated and what prices will be set. The opposite of a market economy is a planned economy, in which the government determines what will be produced and what prices will be charged. In a market economy, producers anticipate what products the market will be interested in and at what price, and they make decisions about what products they will bring to market and how these products will be produced and priced. that promote the public welfare.

Historical Trends

Colonial Times

When European colonists first came to the New World, they found a vast expanse of land inhabited by native americans. Many of the first colonies were business ventures called charter companies that were financed by wealthy English businessmen and landowners. The colonies were granted limited economic and political rights by the king of england After profits proved to be disappointing, many of the investors turned over the companies to the colonists themselves. These actions were to have far-reaching consequences on the shape of the u.s

At first, the colonists were preoccupied with merely surviving. Eventually, they engaged in commerce with europe by exploiting the natural resources of their new homeland. The main agricultural products of the colonies were tobacco, wheat, rye, barley, rice, and indigo plant.

Political and Industrial Revolution

political and economic interference of England, the colonists banded together to forge a new nation: the United States of America. The push for independence from Britain, which culminated in the Revolutionary War (1775–1783), was driven by economic and political motivations, including the desire for greater self-governance and tax relief.

The 1800s: Expansion and Civil War

The 1800s were a period of enormous growth for the United States in terms of territory, population, and economic might. The Northeast developed thriving industries, and cities swelled with hundreds of thousands of European immigrants. Even though the South remained largely rural and agricultural, mechanical innovations, such as the cotton gin, changed the region's focus. Cotton became a major crop and was exported to textile mills in the North and overseas.

political and economic issues, which led to the devastating American Civil War in 1861. ended in 1865.

The Gilded Age

The Gilded Age, which describes an American society in which unscrupulous businessmen and corrupt politicians pursue quick fortunes at the expense of the common people. Indeed, the decades following the Civil War were characterized by scandals involving high-level politicians making money from crooked business deals and by an unprecedented boom in business

The U.S. government had a hands-off approach to business regulation, a tactic described by the French term laissez faire.It was generally believed that the government should not interfere in economic affairs but should instead allow supply and demand and competition to operate unfettered, resulting in a free market.

The gilded age is notable for a growth in corporations.

Panics and Depressions

• panic is a widespread occurrence of public anxiety about financial affairs.

• People lose confidence in banks and investments and want to hold onto their money instead of spending it. This can lead to a severe downturn, or depression, in the economic condition of a nation.

• The U.S. economy suffered from panics and depressions even during the booming growth of the 1800s and early 1900s.

The Twentieth Century Begins

The early twentieth century was a time of social and political change in the United States. Public disgust at the corruption and greed of the gilded age encouraged the movement called progressivism.

• Progressives promoted civic responsibility, worker's rights, consumer protection, political and tax reform, “trust busting,” and strong government action to achieve social improvements

World War I and Inflation

• World War I erupted in Europe in August 1914. The United States entered the conflict in April 1917 and was engaged until the war ended in November 1918. Even though the nation spent only nineteen months at war, the U.S. economy underwent major changes during this period.

The Roaring Twenties

• The roaring 20s began with a whimper; there was a severe economic downturn in 1921. However, this crisis was followed by several years of robust economic growth

• In the late 1920s the stock market became a major factor in the U.S. economy. Investors were richly rewarded, as stocks increased dramatically in value

Black Tuesday—October 29, 1929

• October 29, 1929, panic selling took place all day. Stock values dropped dramatically. The drawback to buying on margin was that if a stock value went down by a certain amount, the lender would make a margin call by asking the buyer for more cash up front.

The great depression

• The U.S. economy suffered a devastating downturn following the stock market crash. The depression was so deep and lasted so long—more than a decade—that it is called the great depression

The new deal

• When the Great Depression began, the laissez-faire attitude still dominated political opinion. Some economists, including Andrew W. Mellon (1855–1937), who served as the secretary of the treasury from 1921 through 1932, advised President Hoover not to interfere.

• The new deal included a wide variety of programs intended to bring relief to suffering Americans, revive farming and business, and reform the stock market and banking industry.

World war 2

• United States officially entered world war 2 in 1941, it had been gearing up its industries for war for more than a year. This experience at mobilization (converting civilian industries to produce military goods) proved to be invaluable

• world war 2 was an expensive endeavor for the United States. However, it was believed that the stakes were so high that the war had to be won at any cost

Keynesian Economics

• The Great Depression shook many peoples' beliefs in the laissez-faire approach to economics advocated by Smith in the eighteenth century. During the 1930s and 1940s different approaches to capitalism began to receive serious attention.

• Politicians of the 1930s were not completely convinced by Keynes's arguments, particularly in regards to government spending

• keynstan economics became the operating principle of the U.S. government in the post–World War II era.

The National Income and Product Accounts

• One innovation of the 1940s was the National Income and Product Accounts (NIPAs), which are compilations of national economic data.

• During World War II the federal government began compiling another macroeconomic measure called the gross national product (GNP).

• GNP estimates were made annually. Eventually, they were calculated on a quarterly basis.

A Postwar Spending Spree

• World War II many U.S. industries demobilized from producing military goods and returned to producing consumer goods.

• Well-paid workers who had been frustrated by wartime shortages were ready to spend money.

• New industries in aviation and electronics arose after World War II.

• The 1950s also experienced a boom in business franchises. In this arrangement an individual could purchase permission from a company in one geographic area to sell the company's products or services in another area.

The cold war, korean, and vitnam war

• The United States left World War II in sound economic shape. During the war, all other industrialized nations had suffered great losses in their infrastructure, financial stability, and populations.

• World War II and quickly regained its industrial capabilities

• It soon took a major role in international affairs, placing it in direct conflict with the only other superpower of the time: the United States.

• A cold war began between the two rich and powerful nations that had completely different political, economic, and social goals for the world

• the early 1950s U.S. forces became embroiled in two Asian conflicts over communism: the korean war and the vietnam war.

• The korean war was relatively short, lasting from 1950 through 1953.

• The United States was engaged in the vietnam war from 1955 until it withdrew the last of its troops in 1975, leaving South Vietnam to a communist takeover.

• The United States was engaged in the vietnam war from 1955 until it withdrew the last of its troops in 1975, leaving South Vietnam to a communist takeover.

The Birth of the Modern Fed

• The nation's central bank—the federal reserve—was formed in 1913 to furnish currency and supervise financial institutions. Gradually, it took on other roles that affected the amount of money circulating in the United States and the interest rates charged by banks to their customers

The 1960s: Social Upheaval and Economic Growth

• The 1960s were a time of social and economic change for the United States. The decade began with the election of President john f kennedy (1917–1963), who promised to ensure economic growth and address growing social problems within the United States.

The 1970s: Stagflation and Energy Crises

• Stagflation is a word coined during the 1970s to describe an economy suffering stagnant growth, high inflation, and high unemployment all at the same time.

• This combination of economic problems was unprecedented in U.S. history.

The 1990s: Sparkling Economic Performance

• The 1990s were a time of phenomenal economic growth for the United States, even amid the shadows of war and an ever-increasing federal deficit

The 2000s: The Economy Begins to Falter

• The first decade of the twenty-first century has been a tumultuous one for the U.S. economy. During the early 2000s the United States endured the September 11, 2001, terrorist attacks, the outbreak of wars in afganistan and Iraq, corporate scandals, devastating hurricanes, and a slump in the stock market.