With the third largest countries of the world, third populated country in the world is one of the super power in the world.US main currencies is United state dollar & it's member of the organization such as WTO, OECD,NAFTA & others. GDP is $18.56 trillion(2016,Nominal), 18.56 trillion(2016, PPP) growth rate of 1.9% & 2.6(2015) Economy divide into Agriculture (1.1%), Industry (19.4%) & Service (79.55%).
characteristics of US economy
in a market economy, produce,s often spend larger of amount of product & services. this is because in a free market economy consumers have freedom of choice & they will choose brand names as their own choice or own recognition, so this is base case for
US economic characteristics.
Limited role of Govt.
The world capitalism refers that capital is the main player rather Govt, in this system Govt. plays limited role in the allocation of resources.
Adam Smith version of the ideal economic system is called capitalism & it is another name for thje market system. in the book of "An inquiry into the nature & case of the Wealth of nations describe a system in which govt has little to do with nations economic activity.In thsi book people have their own hand, own energy & own choice so he should be guided by motivated by own sake rather than impose by some other forces. This or pure capitalism has also been called a
laissez-faire system, this French term mean , let(people) do(as they choice) in pure capitalism system a govt lets people & business make their own economic decisions without govt. interference.
smith ideal influences the founders of US, who limited the role of govt. on national defense & keeping the peace. Since 1880 govt. role changes to quality of foods, drugs, money & banking system, inspection of work place guard against damage to environment.
Free Enterprise
American economy is called the enterprise system, this empasizes individuals are free to own & control the factors of production. if one go into own busines for oneself, he or she will go wrong & wind up or may sell the idea & may super rich. so there is no gurentee of that sucess or failure.
The federal govt bar some restrictions on many stage to do business in this country such as environment law, zoning regulation & disposal law etc.
Freedom of choice
Freedom of choice is the basic right of the buyer 7 it is the opposite of freedom enterprises, it means that buyers not seller make the decisions about what should be produce.
Although buyesrs are free in the market & some times they are protected by Govt. as well Laws set to protect buyer interest in many ares as toys, electronics companies & so on.
Profit oriented
a person invest time, know-how, money & other capital resources in a business, the goal is to make money or profit. profit is the amount left after the costs of production have been paid, including wages, rents, interest & taxes.
The risk of failing is also part of the free enterprises system & whats happened when profit are realized & business fail, profits means a business should run & lose signal entrepreneur that they should move elsewhere, thus the mixing of profit & losses leads to an economy that is more efficient, adoptable, to change & continuously growing.
Competition
In a free-enterprise , the desire of profits encourages
competition—the
rivalry among producers of similar products to acquire more
business by offering lower prices or better quality. Effective
competition often requires a hhuge number of independent sellers, which
means that not a single
company can noticeably affect the price of a particular product or
service. If one company raises its prices, potential customers can
simply go for other
sellers.
Competition leads to an efficient utilization of resources. in which way?
Businesses have to keep prices low enough to attract buyers, yet high
enough to make a own bebfit or profit.
This forces businesses to keep their costs of production as minimum as
possible.
For competition to exist, barriers to entry into, and exit from,
industries must be less. For the most part, the United States has low
barriers to entry
and exit, but there may be exceptions. e,g. a person cannot
become a doctor until he or she has received a
license or authority from a state
government.
Private Property
One of the most important characteristics of free marekt is the existence of
private own property, or property that is owned by individuals or
groups rather than by the country itself or by the federal, state, or
local governments. one as an individual are free to buy whatever one have the funds to do
so,
whether it is land, a business, an automobile, or baseball cards. one can also control how, when, and by whom your property is used. What
are called the
rights of property to buy or sell , however, are actually the rights of humans to
risk investment, own productive assets, learn new ways of producing product ir services, and
then to enjoy
the benefits if these choices result in profits.
The Founders of the United States recognized that such rights must be upheld, because these rights are the invisible engine for
creating wealth and
prosperity for all. The Constitution guarantees an owner’s right to
own private property and its use.
Thus, in principle, no level
of government in the United States can seize or use private own property, at least not without paying pennies the owners.