RETAIL (SHOPPING): The big shopping malls are in the suburbs: There are still some department stores and downtown shopping areas in most US cities, but the big shopping malls and discount stores are usually located out in the suburban communities. Some of the major outlet centers are located in the countryside miles from the nearest major city.

Department Stores: These offer good quality and high fashion: Department stores are large establishments that offer a wide selection of merchandise including fashion clothing, house wares, appliances, luggage and jewelry. They normally offer good quality merchandise, well known brands and the latest fashions, but not low quality products at bargain prices. They frequently have seasonal sales with attractive discounts. At such times, you can get high quality or fashion merchandise at bargain prices. In July and August, they have end-of-summer sales. In November, the Thanksgiving Day sale of pre-Christmas merchandise is one of the biggest shopping days of the year. From December 26 through mid-January, they hold big after-Christmas sales. In February, all the winter merchandise goes on sale. In addition, they have many special promotions and clearance sales. The big department stores are typically parts of national chains, so you can find the same stores in many cities. They normally have a downtown store in a major city with several branch stores in the surrounding suburban shopping malls. Here are the names of some well-known national department stores. Lord & Taylor, Hecht's, Strawbridge's, Kaufman's, Filene's, Macy's, Bloomingdale's, Burdine's, Lazarus, Rich's, Nordstrom's, Sak's, Dayton-Hudson's, Marshall's and Bergdorf-Goodman. 

General Merchandise Stores: They offer affordable quality. "Sears" and "JCPenny's" are two large national chains with stores across the USA. They are similar to department stores but they do not offer high fashion merchandise or prestige brands. Instead, they feature good quality merchandises at affordable prices. They are particularly known for their selection of children's clothing, home appliances, house wares and domestic goods. Sears is famous for its selection of tools and lawn and garden products. 

Discount Stores: These sell at low prices. Discount stores sell some good quality merchandise at affordable prices and some lower quality merchandise at very low prices. If you are not looking for the latest fashions, or the famous brands, or the best quality, you can find some very inexpensive merchandise at a discount store. Some national discount chains with stores across the US are K-Mart, Wal-Mart, Target and Caldor. 

Outlet Malls: Outlet stores or factory outlets sell high quality merchandise with a well-known brand at discounted prices. They usually offer merchandise with slight manufacturing flaws and remainders from the last season or the previous year. They do not have end-of-season sales like the department stores, as their merchandise is always discounted 20% to 40% below department store prices. If you take advantage of the end-of-season sales at a department store, you can frequently get better bargains. At all other times, the outlet store is the best buy. Outlet malls with many hundreds of top brand name outlet stores like Levi's, Ralph Lauren, Timberland, and Pioneer can be found in most states, and they are often a bargain hunter's wonderland. 

State and Local Sales Tax: The US government does not have a value-added tax on merchandise as governments do in many other countries, but most states and some cities collect a sales tax on all purchases. State taxes usually average 4% to 8%. Some cities add an additional 2%. Remember when you purchase something for $1.00, you may have to pay $1.08. Some states exempt all clothing and food purchases from sales tax. If you buy something big like a car or motorcycle, be sure to specify that it will be exported and you can usually obtain an exemption from the sales tax. 

Words of Caution: Clothing sizes in the USA are based on measurements in inches. If you purchase any electric appliances or electronics in the US, remember that all electrical items are normally 110v and 60Hz. Be sure that the item is adaptable to your local electric supply. US televisions, video recorders and cell phones use different standards than most other countries and are incompatible. 

AMERICAN BUSINESS ORGANISATIONS: Americans have always believed they live in a land of opportunity, where anybody who has a good idea, determination, and a willingness to work hard can start a business. Small enterprises account for 52 percent of all U.S. workers, according to the U.S. Small Business Administration (SBA). Some 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. By contrast, 47.7 million Americans work for firms with 500 or more employees.

A particular strength of small businesses is their ability to respond quickly to changing economic conditions. They often know their customers personally and are especially suited to meet local needs. 

Small companies that rapidly became major players in the national and international economies include the computer software company Microsoft; the package delivery service Federal Express; sports clothing manufacturer Nike; the computer networking firm America OnLine (AOL); and ice cream maker Ben & Jerry's.

Congress created the Small Business Administration in 1953 to provide professional expertise and financial assistance to persons wishing to form or run small businesses. In a typical year, the SBA guarantees $10,000 million in loans to small businesses, usually for working capital or the purchase of buildings, machinery, and equipment. SBA-backed small business investment companies invest another $2,000 million as venture capital.

The Sole Proprietor: Most businesses are sole proprietorships, they are owned and operated by a single person. In a sole proprietorship, the owner is entirely responsible for the business's success or failure. He or she collects any profits, but if the venture loses money and the business cannot cover the loss, the owner is responsible for paying the bills, even if doing so involves their personal assets.

• Advantages of Sole Proprietorships: They suit people who like to exercise initiative and be their own bosses. They are flexible, since owners can make decisions quickly without having to consult others. By law, individual proprietors pay fewer taxes than corporations. And customers often are attracted to sole proprietorships, believing an individual who is accountable will do a good job.

• Disadvantages of Sole Proprietorships: A sole proprietorship legally ends when an owner dies, although someone may inherit the assets and continue to operate the business. Also, since sole proprietorships generally are dependent on the amount of money their owners can save or borrow, they usually lack the resources to develop into large-scale enterprises.

The Business Partnership: One way to start or expand a venture is to create a partnership with two or more co-owners. Partnerships enable entrepreneurs to pool their talents; one partner may be qualified in production, while another may excel at marketing, for instance. States regulate the rights and duties of partnerships. Co-owners generally sign legal agreements specifying each partner's duties. Partnership agreements also may provide for "silent partners," who invest money in a business but do not take part in its management.

• Advantages of Partnerships: They are exempt from most reporting requirements the government imposes on corporations, and they are taxed favorably compared with corporations. Partners pay taxes on their personal share of earnings, but their businesses are not taxed. 

• Disadvantages of Partnerships: Each member is liable for all of a partnership's debts, and the action of any partner legally binds all the others. If one partner looses money from the business, for instance, the others must share in paying the debt. Another major disadvantage can arise if partners have serious and constant disagreements.

Corporations: Although there are many small and medium-sized companies, big business plays a dominant role in the American economy. In the United States, most large businesses are organized as corporations. A corporation is a specific legal form of business organization, chartered by one of the 50 states and treated under the law like a person. Corporations may own property, sue or be sued in court, and make contracts. By the mid-1990s, more than 40 percent of U.S. families owned common stock, directly or through mutual funds or other intermediaries. But widely dispersed ownership also implies a separation of ownership and control. Because shareholders generally cannot know and manage the full details of a corporation's business, they elect a board of directors to make broad corporate policy. Corporate boards place day-to-day management decisions in the hands of a chief executive officer (CEO), who may also be a board's chairman or president. The CEO supervises other executives, including a number of vice presidents who oversee various corporate functions, as well as the chief financial officer, the chief operating officer, and the chief information officer (CIO). The CIO came onto the corporate scene as high technology became a crucial part of U.S. business affairs in the late 1990s. As long as a CEO has the confidence of the board of directors, he or she generally is permitted a great deal of freedom in running a corporation.

• Advantages of Corporations: Large companies can supply goods and services to a greater number of people, and they frequently operate more efficiently than small ones, they often can sell their products at lower prices because of the large volume and small costs per unit sold. They have an advantage in the marketplace because many consumers are attracted to well-known brand names, which they believe guarantee a certain level of quality. Because a corporation has legal standing itself, its owners are partially sheltered from responsibility for its actions. Owners of a corporation also have limited financial liability; they are not responsible for corporate debts. Because corporate stock is transferable, a corporation is not damaged by the death or disinterest of a particular owner. The owner can sell his or her shares at any time, or leave them to heirs.

• Disadvantages of Corporations: Large corporations at times have shown themselves to be inflexible in adapting to changing economic conditions. As distinct legal entities, corporations must pay taxes. The dividends they pay to shareholders, unlike interest on bonds, are not tax-deductible business expenses. And when a corporation distributes these dividends, the stockholders are taxed on the dividends.

There are many ways for corporation to raise money, or capital, such as:

• Issuing Bonds: A bond is a written promise to pay back a specific amount of money at a certain date or dates in the future. Bondholders receive interest payments at fixed rates on specified dates. Corporations benefit by issuing bonds because the interest rates they must pay investors are generally lower than rates for most other types of borrowing and because interest paid on bonds is considered to be a tax-deductible business expense. However, corporations must make interest payments even when they are not showing profits.

• Issuing Preferred Stock: A company may choose to issue new "preferred" stock to raise capital. Buyers of these shares have special status the company encounters financial trouble. If profits are limited, preferred-stock owners will be paid their dividends after bondholders receive their guaranteed interest payments but before any common stock dividends are paid.

• Selling Common Stock: If a company is in good financial health, it can raise capital by issuing common stock. Typically, investment banks help companies issue stock, agreeing to buy any new shares issued at a set price if the public refuses to buy the stock at a certain minimum price. Some companies pay large dividends, offering investors a steady income. In general, the value of shares increases as investors come to expect corporate earnings to rise.

• Borrowing: Companies can also raise short-term capital by getting loans from banks or other lenders.

• Using profits: Companies also can finance their operations by retaining their earnings. Some corporations, especially electric, gas, and other utilities, pay out most of their profits as dividends to their stockholders. Others distribute, say, 50 percent of earnings to shareholders in dividends, keeping the rest to pay for operations and expansion. Still other corporations, often the smaller ones, prefer to reinvest most or all of their net income in research and expansion, hoping to reward investors by rapidly increasing the value of their shares.

Franchising: Successful small businesses sometimes grow through a practice known as franchising. In a typical franchising arrangement, a successful company authorizes an individual or small group of entrepreneurs to use its name and products in exchange for a percentage of the sales revenue. The founding company lends its marketing expertise and reputation, while the entrepreneur who is granted the franchise manages individual outlets and assumes most of the financial liabilities and risks associated with the expansion. While it is somewhat more expensive to get into the franchise business than to start an enterprise from scratch, franchises are less costly to operate and less likely to fail. That is partly because franchises can take advantage of economies of scale in advertising, distribution, and worker training. It is estimated that the United States had about 535,000 franchised establishments in 1992 -- including auto dealers, gasoline stations, restaurants, real estate firms, hotels and motels, and dry cleaning stores. Franchise companies were expected to account for about 40 percent of U.S. retail sales by the year 2000.

A NATION OF FARMERS: Agriculture in the United States has changed dramatically over the last 200 years. At the time of the American Revolution (1775-83), 95 percent of the population were farmers. Today that figure is less than 2 percent. Today individuals or families own only 64 percent of the farmland. The remainder is owned by corporations, large and small, and farming and its related industries have become big business -- "agribusiness."

Farming is very successful in America mainly because of the quantity of land and the good weather conditions. Desert only exists in a small part of the western United States. Elsewhere, rainfall ranges from modest to plenty, and rivers and underground water allow for irrigation where needed. Large stretches of level or gently rolling land, especially in the Midwest, provide ideal conditions for large-scale agriculture. 

American farmers have always accepted new technology, throughout the 19th century one new tool or invention followed another in rapid succession. By the time of the American Civil War (1861-65), machines were taking over the work of haying, threshing, mowing, cultivating, and planting, in doing so they brought big increases in productivity. 

Another factor in the rise of agricultural output was the rapid flow of settlers across the Mississippi River in the late 19th century. The federal government promoted the internal migration in several ways, including the Homestead Act. Enacted in 1862, the act perpetuated the existing pattern of small family farms by offering a "homestead" of 65 hectares to each family of settlers for a nominal fee. For a time inventions and pro-farming policies were almost too successful. Overproduction became a serious problem after the Civil War. With demand unable to keep pace with supply, the prices farmers received for their products fell. The years from the 1870s until about 1900 were especially hard for the American farmer. 

THE GOVERNMENT'S ROLE IN FARMING: Beginning with the creation of the Department of Agriculture in 1862, the federal government took a direct role in agricultural affairs, going so far as to teach farmers how to make their land more productive. After a period of prosperity in the early 20th century, farm prices declined in the 1920s. The Great Depression of the 1930s drove prices still lower, and by 1932 farm prices had dropped, on average, to less than one-third of their 1920 levels. Farmers went bankrupt by the tens of thousands. 

The government pays farmers to plant fewer crops to stop over production.

Price supports and payments apply only to such basic commodities as grains, dairy products, and cotton; many other crops are not federally subsidized. Farm subsidy programs have been criticized on the grounds that they benefit large farms most and accelerate the trend toward larger -- and fewer -- farms.

Overall, American agriculture has been a success story. American consumers pay less for their food than those in many other industrial countries, and one-third of the cropland in the United States produces crops destined for export. In 1995 agricultural exports exceeded imports by nearly two to one. 

THE AMERICAN STYLE OF MASS PRODUCTION: Thanks to several waves of immigration, America gained population rapidly throughout the 19th and early 20th centuries, when business and industry were expanding. Population grew fast enough to provide a steady stream of workers.

In the late 18th century, American manufacturers adopted the factory system, which gathered many workers together in one place. To this was added something new, the "American system" of mass production, which originated in the firearms industry about 1800. The new system allowed the final product to be made in stages, with each worker specializing in a different task. 

By 1890 America's factories production was bigger than the production from farms. By 1913, more than one-third of the world's industrial production came from the United States. 

Lower costs made possible both higher wages for workers and lower prices for consumers. More and more Americans became able to afford products made in their own country. During the first half of the 20th century, mass production of consumer goods such as cars, refrigerators, and kitchen stoves helped to revolutionize the American way of life. 

By the end of World War II in 1945, the United States had the greatest productive of any country in the world, and the words "Made in the U.S.A." meant high quality. 

The 20th century has seen the rise and decline of several industries in the United States. The car industry has struggled to meet the challenge of foreign competition. The clothing industry has declined in the face of competition from countries where labor is cheaper. But other manufacturing industries have appeared, including airplanes and cellular telephones, microchips and space satellites, microwave ovens and high-speed computers. 

As high-tech industries have grown and older industries have declined, the proportion of American workers employed in manufacturing has dropped. Service industries now dominate the economy, selling a service rather than making a product, these industries include entertainment and recreation, hotels and restaurants, communications and education, office administration, and banking and finance.

Some Americans are concerned that by investing abroad, American business is making future competitors. The American government policies improved Japan's economy. The North American Free Trade Agreement in 1993, however, confirmed the continuing American commitment to international trade. 

INDUSTRIAL DEPRESSION: At the start of the 1920s there was a  Communist revolution in Russia , which lead to a fear that revolution might also break out in the United States. Meanwhile, workers in many parts of the country were striking for higher wages.

President Franklin Roosevelt vowed to help "the forgotten man," the farmer who had lost his land or the worker who had lost his job. Congress guaranteed workers the right to join unions and bargain collectively, and established the National Labor Relations Board to settle disputes between unions and employers. 

Not long after, skilled craftsperson's and industrial workers led to the founding of a new labor organization, the Congress of Industrial Organizations (CIO).

The Depression's effect on employment did not end until after the United States entered World War II in 1941. Factories needed more workers to produce the airplanes, ships, weapons, and other supplies for the war effort. By 1943, with 15 million American men serving in the armed forces, the United States had a labor shortage, which women (in a reversal of societal attitudes) were encouraged to fill. Before long, one out of four workers in defense plants was a woman. 

THE AMERICAN ECONOMIC SYSTEM: The capitalist system means people are naturally selfish, they are involved in manufacturing and trade in order to gain wealth and power. It leads to increased production and sharpens competition. As a result, goods circulate more widely and at lower prices, jobs are created, and wealth is spread.

Most Americans believe that their nation could not be a great economic power without capitalism, also known as free enterprise. Meaning that government should interfere in business as little as possible. 

THE PAST PROBLEMS IN AMERICAN BUSINESS: Factory owners often required them to put in long hours for low wages, provided them with unsafe and unhealthy workplaces, and hired the children of poor families. There was discrimination in hiring: Black Americans and members of some immigrant groups were rejected or forced to work under highly unfavorable conditions. Entrepreneurs took full advantage of the lack of government oversight to enrich themselves by forming monopolies, eliminating competition, setting high prices for products, and selling shoddy goods. 

In 1890, the Sherman Antitrust Act took the first steps toward breaking up monopolies. In 1906, Congress enacted laws requiring accurate labeling of food and drugs and the inspection of meat. During the Great Depression, President Roosevelt and Congress enacted laws designed to ease the economic crisis. Among these were laws regulating the sale of stock, setting rules for wages and hours in various industries, and putting stricter controls on the manufacture and sale of food, drugs, and cosmetics. 

New federal agencies, such as the Environmental Protection Agency, have come into being. And new laws and regulations have been designed to ensure that businesses do not pollute air and water and that they leave an ample supply of green space for people to enjoy. 

The sum total of these laws and regulations has changed American capitalism. There is scarcely anything a person can buy in the United States today that is not affected by government regulation of some kind. 

Political conservatives believe there is too much government regulation of business. They argue that some of the rules that firms must follow are unnecessary and costly. In response to such complaints, the government has tried to reduce the paperwork required of businesses and to set overall goals or standards for businesses to reach, as opposed to dictating detailed rules of operation. 

THE WORK FORCE TODAY: After the war a wave of strikes for higher wages swept the nation.

The American work week typically amounts to between 35 and 40 hours, but there are many differences: people working part-time or on "flexi-time" or "telecommuting" from their homes with the assistance of phone, computer, and fax machine. 

MONOPOLIES & MERGERS: The corporate form clearly is a key to the successful growth of numerous American businesses. But Americans at times have viewed large corporations with suspicion, and corporate managers themselves have wavered about the value of bigness.
 
In the late 19th century, many Americans feared that corporations could raise large amounts of money and harm smaller ones or could combine and collude with other firms to stop competition. People said that business monopolies would force consumers to pay high prices and deprive them of choice. The concerns lead to two major laws aimed at taking apart or preventing monopolies: the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914. Government continued to use these laws to limit monopolies throughout the 20th century. In 1984, government "trustbusters" broke a near monopoly of telephone service by American Telephone and Telegraph (AT & T). In the late 1990s, the Justice Department sought to reduce dominance of the computer software market by Microsoft Corporation.

In general, government antitrust officials see a threat of monopoly power when a company gains control of 30 percent of the market for a commodity or service. While antitrust laws may have increased competition, they have not kept U.S. companies from getting bigger. 

The 1980s and 1990s brought new waves of friendly mergers and "hostile" takeovers in some industries, as corporations tried to position themselves to meet changing economic conditions. Mergers were prevalent, for example, in the oil, retail, and railroad industries, all of which were undergoing substantial change. Many airlines sought to combine after deregulation unleashed competition beginning in 1978. Deregulation and technological change helped spur a series of mergers in the telecommunications industry as well.

Also in the late 1990s, Travelers Group merged with Citicorp, forming the world's largest financial services company, while Ford Motor Company bought the car business of Sweden's AB Volvo. Following a wave of Japanese takeovers of U.S. companies in the 1980s, German and British firms grabbed the spotlight in the 1990s, as Chrysler Corporation merged into Germany's Daimler-Benz AG and Deutsche Bank AG took over Bankers Trust. Marking one of business history's high ironies, Exxon Corporation and Mobil Corporation merged, restoring more than half of John D. Rockefeller's industry-dominating Standard Oil Company empire, which was broken up by the Justice Department in 1911. The $81,380 million merger raised concerns among antitrust officials, even though the Federal Trade Commission (FTC) unanimously approved the consolidation.

Instead of merging, some firms have tried to improve their business through joint ventures with competitors. Because these arrangements eliminate competition in the product areas in which companies agree to cooperate, they can pose the same threat to market disciplines that monopolies do.

A spectacular example of cooperation among fierce competitors occurred in 1991 when International Business Machines (IBM), which was the world's largest computer company, agreed to work with Apple Computer, the pioneer of personal computers, to create a new computer software operating system that could be used by a variety of computers. A similar proposed software operating system arrangement between IBM and Microsoft had fallen apart in the mid-1980s, and Microsoft then moved ahead with its own market-dominating Windows system. By 1999, IBM also agreed to develop new computer technologies jointly with Dell Computer, a strong new entry into that market.

THE STOCK MARKET: Very early in America's history, people saw that they could make money by lending it to those who wanted to start or expand a business. To this day, small American entrepreneurs usually borrow the money they need from friends, relatives, or banks. Larger businesses, however, are more likely to acquire cash by selling stocks or bonds to unrelated parties. These transactions usually take place through a stock exchange, or stock market. 

Europeans established the first stock exchange in Antwerp, Belgium, in 1531. It was introduced to the United States in 1792. The stock market was a great success, especially at the New York Stock Exchange, located in the Wall Street area of New York City, the nation's financial hub. 

Americans pride themselves on the efficiency of their stock market and other capital markets, which enable vast numbers of sellers and buyers to engage in millions of transactions each day. These markets owe their success in part to computers, but they also depend on tradition and trust -- the trust of one broker for another, and the trust of both in the good faith of the customers they represent to deliver securities after a sale or to pay for purchases.

Companies are required by law to issue quarterly earnings reports, more elaborate annual reports, and proxy statements to tell stockholders how they are doing. In addition, investors can read the market pages of daily newspapers to find out the price at which particular stocks were traded during the previous trading session. They can review a variety of indexes that measure the overall pace of market activity; the most notable of these is the Dow Jones Industrial Average (DJIA), which tracks 30 prominent stocks. Investors also can turn to magazines and newsletters devoted to analyzing particular stocks and markets. Certain cable television programs provide a constant flow of news about movements in stock prices. And now, investors can use the Internet to get up-to-the-minute information about individual stocks and even to arrange stock transactions.

The Stock Exchanges: There are thousands of stocks, but shares of the largest, best-known, and most actively traded corporations generally are listed on the New York Stock Exchange (NYSE). The exchange dates its origin back to 1792. The smaller American Stock Exchange, which lists numerous energy industry-related stocks, operates in much the same way and is located in the same Wall Street area as the New York exchange. Other large U.S. cities host smaller, regional stock exchanges.

The largest number of different stocks and bonds traded are traded on the National Association of Securities Dealers Automated Quotation system, or Nasdaq. This so-called over-the-counter exchange, which handles trading in about 5,240 stocks, is not located in any one place; rather, it is an electronic communications network of stock and bond dealers. The National Association of Securities Dealers, which oversees the over-the-counter market, has the power to expel companies or dealers that it determines are dishonest or insolvent. Because many of the stocks traded in this market are from smaller and less stable companies, the Nasdaq is considered a riskier market than either of the major stock exchanges. But it offers many opportunities for investors. By the 1990s, many of the fastest growing high-technology stocks were traded on the Nasdaq.

The Regulators: The Securities and Exchange Commission (SEC), which was created in 1934, is the principal regulator of securities markets in the United States. Before 1929, individual states regulated securities activities. But the stock market crash of 1929, which triggered the Great Depression, showed that arrangement to be inadequate. The Securities Act of 1933 and the Securities Exchange Act of 1934 consequently gave the federal government a preeminent role in protecting small investors from fraud and making it easier for them to understand companies' financial reports.

Companies issuing stocks, bonds, and other securities must file detailed financial registration statements, which are made available to the public. The SEC determines whether these disclosures are full and fair so that investors can make well-informed and realistic evaluations of various securities. The SEC also oversees trading in stocks and administers rules designed to prevent price manipulation; to that end, brokers and dealers in the over-the-counter market and the stock exchanges must register with the SEC. In addition, the commission requires companies to tell the public when their own officers buy or sell shares of their stock; the commission believes that these "insiders" possess intimate information about their companies and that their trades can indicate to other investors their degree of confidence in their companies' future.

The agency also seeks to prevent insiders from trading in stock based on information that has not yet become public. In the late 1980s, the SEC began to focus not just on officers and directors but on insider trades by lower-level employees or even outsiders like lawyers who may have access to important information about a company before it becomes public. The SEC has five commissioners who are appointed by the president. No more than three can be members of the same political party; the five-year term of one of the commissioners expires each year.

TELECOMMUNICATIONS: Until the 1980s in the United States, the term "telephone company" was synonymous with American Telephone & Telegraph. AT&T controlled nearly all aspects of the telephone business. Its regional subsidiaries, known as "Baby Bells," were regulated monopolies, holding exclusive rights to operate in specific areas. The Federal Communications Commission regulated rates on long-distance calls between states, while state regulators had to approve rates for local and in-state long-distance calls.

Government regulation was justified on the theory that telephone companies, like electric utilities, were natural monopolies. Competition, which was assumed to require stringing multiple wires across the countryside, was seen as wasteful and inefficient. That thinking changed beginning around the 1970s, as sweeping technological developments promised rapid advances in telecommunications. Independent companies asserted that they could, indeed, compete with AT&T. But they said the telephone monopoly effectively shut them out by refusing to allow them to interconnect with its massive network.

Telecommunications deregulation came in two sweeping stages. In 1984, a court effectively ended AT&T's telephone monopoly, forcing the giant to spin off its regional subsidiaries. AT&T continued to hold a substantial share of the long-distance telephone business, but vigorous competitors such as MCI Communications and Sprint Communications won some of the business, showing in the process that competition could bring lower prices and improved service.

A decade later, pressure grew to break up the Baby Bells' monopoly over local telephone service. New technologies -- including cable television, cellular (or wireless) service, the Internet, and possibly others -- offered alternatives to local telephone companies. But economists said the enormous power of the regional monopolies inhibited the development of these alternatives. In particular, they said, competitors would have no chance of surviving unless they could connect, at least temporarily, to the established companies' networks -- something the Baby Bells resisted in numerous ways.

In 1996, Congress responded by passing the Telecommunications Act of 1996. The law allowed long-distance telephone companies such as AT&T, as well as cable television and other start-up companies, to begin entering the local telephone business. It said the regional monopolies had to allow new competitors to link with their networks. To encourage the regional firms to welcome competition, the law said they could enter the long-distance business once new competition was established in their domains.

At the end of the 1990s, it was still too early to assess the impact of the new law. There were some positive signs. Numerous smaller companies had begun offering local telephone service, especially in urban areas where they could reach large numbers of customers at low cost. The number of cellular telephone subscribers soared. Countless Internet service providers sprung up to link households to the Internet. But there also were developments that Congress had not anticipated or intended. A great number of telephone companies merged, and the Baby Bells mounted numerous barriers to thwart competition. The regional firms, accordingly, were slow to expand into long-distance service. Meanwhile, for some consumers -- especially residential telephone users and people in rural areas whose service previously had been subsidized by business and urban customers -- deregulation was bringing higher, not lower, prices.

American Education Systems

• The structure of U.S. education includes 12 years of regular school.

• Duration of school lasts 12 years, until around age 18 (depending on the age at entry). Each of the school years is called a grade, so that 12th grade corresponds to the 12th year, etc.

• Infant school, pre-school, and the first or second year of formal schooling are collectively termed Early Childhood Education in the United States. Formal primary education is called Elementary Education and ranges from first grade through grade 4, 5, or 6, depending on state and district regulations. The upper level of primary education is often organized separately into a unit called Middle School, which begins at grade 4, 5, or 6 and ends at grade 6, 7, or 8. Likewise, the lower grades of secondary education (years 7, 8, or 9 depending on state and district regulations) are sometimes organized separately into what is called Junior High School. Regular (including upper) secondary education is called High School, beginning in grade 8, 9, or 10 and ending at grade 12, again depending on state and district regulations.

• Compulsory schooling ends by law at age 16 in 30 states, at age 17 in 9 states, and at age 18 in 11 states plus the District of Columbia. Students may drop out of school if they have reached the age set in their state's law for the end of compulsory schooling, but dropouts are not considered to have completed school and no certificate or award is issued at this stage. The U.S. dropout rate is just over 11 percent of secondary-level students age 16 and older.

• Two basic school leaving certificates are awarded for completing school, the High School Diploma, awarded to graduates of secondary school, and the GED (General Educational Development) Certificate, awarded to adults who left school but then complete a special supervised study and examination program. High School Diplomas represent a variety of different curricula and standards.

• No national education system or national curriculum exists in the United States. The federal government does not operate schools. 

• Each of the 50 states has its own Department of Education which sets guidelines for the schools of that state. Public colleges and universities receive funding from the state in which they are located.

• Most of the control of American schools lies in the hands of each local school district. Each school district is governed by a school board, a small committee of people elected by the local community. The school board sets general policies for the school district. Students do not pay tuition for schools (under the age of 16).

• High school students take a wide range of courses. All students are required to take English, math, science, and social studies courses. They also might be required to take a foreign language and/or physical education. A course can be one semester or two semesters long. 

• Usually, a student graduates after he or she has successfully passed all of the required courses. Grades are given to students for each course at the end of every semester or term. Grades are: A = Excellent B = Above Average C = Average D = Below Average F = Failure

• Admission to a College/University - A student’s high school grade point average (GPA) is also considered. A GPA is a quantitative figure representing a student’s accumulated grades. Each letter grade is assigned a number of points: A=4 points, B=3, C=2 , D=1, and F= 0 points. A GPA is calculated by adding all of the points earned for each course grade and dividing the total points by the total number of courses taken. For example, a GPA of 3.0 means a “B” average for all of the courses taken. 

• Most colleges and universities set a minimum SAT score that a student must achieve in order to gain admission. The SAT is the Scholastic Aptitude Test, a standardized quantitative examination taken by high school students throughout the United States. Each college or university decides the minimum SAT score it will accept. 

• Higher Education: After finishing high school (twelfth grade), U.S. students may go on to college or university. College or university study is known as "higher education."

• Study at a college or university leading to the Bachelor's Degree is known as "undergraduate" education. Study beyond the Bachelor's Degree is known as "graduate" school, or "postgraduate" education. Advanced or graduate degrees include law, medicine, the M.B.A., and the Ph.D. (doctorate). 

• Church-related School: Many U.S. colleges and universities were founded by religious groups. The relationship, however, between the school and the religious organization may be very flexible. Sometimes, these schools prefer to admit students who are members of the sponsoring religious group. Nearly all these schools welcome students of all religions and beliefs. 

SCHOOL EDUCATION:

• PRESCHOOL (or nursery schools) these specialize in teaching very young children (ages 3-5) to adjust to groups outside home and family and prepare them for the routine of formal schooling.

• There are basically two levels of education. The elementary level begins with the first grade when the child is about six. This level extends to the eighth grade when the child is about thirteen. The secondary level begins with the ninth grade when the child is about 14 and continues to the twelfth grade when the child is about eighteen.

• The traditional division is:

  Elementary school = grades 1 to 3/4 
  Middle school = grades 4 to 6/7
  Junior high school = grades 6/7 to 8/9 
  Senior high school = grades 9/10 to 12

• PUBLIC SCHOOLS (government supported). They provide tax-supported schooling free of charge to students beginning with kindergarten at age 5 and continuing from 1st to 12th grades, when students receive a high-school diploma.

• Different schools divide the 12 years into various stages. Most common are the 6-3-3, consisting of 6 years of elementary school, 3 years of junior high, and 3 of high school; and the 6-2-4, consisting of 2 years of junior high and 4 years of high school. These years are referred to as freshman (9th), sophomore (10th) , junior (11th), and senior (12th). There is no division into academic or vocational A streams. Instead, junior and senior high schools offer a wide variety of courses, some of which are required of all students, the others elective (elected by the student).

• PRIVATE SCHOOLS. They do not receive tax monies and therefore charge tuition fees. These schools provide for a number of special needs not always met adequately in the public schools. For instance, many private schools are supported by churches or synagogues and provide religious education as opposed to the secular education provided by public schools. The Catholic Church operates the largest number of schools outside the public school system. These parochial schools are open to children of all faiths, but they give preference to Catholics. There are also schools associated with various Protestant churches, Seventh-Day Adventists and Society of Friends (Quakers), as well as schools serving those of the Jewish and Muslim faiths.

COLLEGES, UNIVERSITIES, AND INSTITUTES:

• Degree-granting institutions in the United States can be called by any of these terms, and colleges and institutes are in no way inferior to universities. As a general rule, colleges tend to be smaller and usually offer only undergraduate degrees, while a university also offers graduate degrees. An institute usually specializes in degree programs in a group of closely related subject areas, so you will also come across degree programs offered at institutes of technology, institutes of fashion, institutes of art and design, and so on. 

• Within each college or university you will find schools, such as the school of arts and sciences or the school of business. Each school is responsible for the degree programs offered by the college or university in that area of study.

• One of the most attractive features of the bachelor's degree program in the United States is that it is highly flexible. You can usually choose from a wide variety of courses and create your own unique program of study. The degree is awarded after you complete a specified number of credits.

• The bachelor's degree typically takes four years to complete. The associate degree usually takes two years to complete. Associate degree programs may be "terminal" programs, which lead into specific careers upon graduation, or "transfer" programs, which correspond to the first two years of a bachelor's degree and tend to be more liberal arts based. Associate degree programs are offered at two-year colleges known as junior or community colleges. Four-year colleges and universities offer bachelor's degree programs, with a small number also offering associate degree programs. 

• Liberal arts is a shortened form of the term "liberal arts and sciences," and the liberal arts philosophy is a unique feature of the U.S. higher education system. U.S. undergraduate education is based on this concept, which believes in providing a well-rounded academic education that develops the student's verbal, written, and reasoning skills. Students at a liberal arts college, or at a university with a strong liberal arts program, begin their degree study by taking classes in a wide variety of courses in the arts, humanities, languages, and the social and physical sciences. They then choose a subject in which to specialize (called a major) and take about 25 to 50 percent of their classes in the major area.

• Professional (that is, career-oriented) education is included within the U.S. university system. Large universities tend to be comprised of a college of arts and sciences and several professional schools - usually business, agriculture, medicine, law, and journalism.

• There are four types of degrees: 

  Associate’s (completion of a program in a specific career field),
  Bachelor’s (conferred after completion of an undergraduate program),
  Master’s (first graduate degree)
  Doctorate (second graduate degree and final degree). 

• State College or University: A state school is supported and run by a state or local government. Each of the 50 U.S. states operates at least one state university and possibly several state colleges. Some state schools have the word "State" in their names. 

• Private College or University: These schools are operated privately, not by a branch of the government. Tuition will usually be higher than at state schools. Often, private colleges and universities are smaller in size than state schools. 

• Two-Year College: A two-year college admits high school graduates and awards an Associate's Degree. Some two-year colleges are state-supported, or public; others are private. Two-year college or "junior" college graduates usually transfer to four-year colleges or universities, where they complete the Bachelor's Degree in two or more additional years. 

• Community College: This is a two-year state, or public college. Community colleges serve a local community, usually a city or county. Many of the students are commuters who live at home, or evening students who work during the day. Often, community colleges welcome international students.

• Professional School: A professional school trains students in fields such as art, music, engineering, business, and other professions. Some are part of universities. Others are separate schools. Some offer graduate degrees. 

• Institute of Technology: This is a school which offers at least four years of study in science and technology. Some institutes of technology have graduate programs. Others offer shorter courses. 

• Technical Institute: A technical institute trains students in fields such as medical technology or industrial engineering. Although the course may prepare you for the career you want, the degree may or may not be equivalent to a college or university degree. Some colleges and universities do not accept credits from students who have attended technical institutes and want to transfer. If you are considering a technical institute, find out if your government, and U.S. colleges and universities, accept the school's degree.

• Distance education is an increasingly popular way to study for everything from a short professional course to a graduate degree in the United States, and there are numerous institutions offering undergraduate degree programs using distance education teaching methods. Under the distance education model, students no longer attend classes in a classroom on a campus; instead, classes are delivered "from a distance" through the use of technologies such as the Internet, satellite television, video conferencing, and other means of electronic delivery.

• U.S. students usually study a wide variety of subjects while in college. Many students do not specialize exclusively in one field until graduate school.  Students in the first year are called "freshmen," and they are "sophomores" in the second year. Some schools require freshmen and sophomores to take courses in different areas of learning: literature, science, the social sciences, the arts, history, and so forth. Freshmen and sophomores are known as "underclassmen." 

• The "junior" and "senior," or third and fourth years, are the "upper classes." Students in these years are known as "juniors" and "seniors"- "upperclassmen." When they enter their junior year, they must choose a "major" field of study. They must take a certain number of courses in this department, or field. In some schools, students also choose a "minor" field. There is usually time for students to choose several other "elective" (extra) courses in other subjects. 

• Classes range from large lectures for several hundred students to smaller classes and "seminars" (discussion classes) with only a few students. Students enrolled in lecture courses are often divided into smaller groups, or "sections." The sections meet separately to discuss the lecture topics and other material. 

• Professors usually assign textbook and other readings each week. They also require several written reports each semester (term). You will be expected to keep up to date with the required readings in order to join in class discussions and to understand the lectures. Science students are also expected to spend time in the laboratory. 

• The school calendar usually begins in August or September and continues through May or June.

• The academic year at many schools is composed of two terms or semesters. Other schools use a three-term calendar known as the "trimester" system. Still others divide the year into the "quarter" system of four terms, including a summer session which is optional. 

• Credits: Each course is considered to be worth a number of "credits" or "credit hours." This number is roughly the same as the number of hours a student spends in class for that course each week. A course is typically worth three to five credits. 

• Transfers: If a student enrolls in a new university before finishing a degree, usually most credits earned at the first school can be used to complete a degree at the new university. This means a student can transfer to another university and still graduate within a reasonable time. 

• Professors give each student a mark or "grade" for each course. The marks are based upon: 

• Classroom participation: Discussion, questions, conversation; Students are expected to participate in class discussions, especially in seminar classes. This is often a very important factor in determining a student's grade. 

• A midterm examination: Usually given during class time. 

• One or more research or term papers, or laboratory reports. 

• Possible short exams or "quizzes.": Sometimes the professor will give an unannounced "surprise quiz." This doesn't count heavily toward the grade but is intended to inspire students to keep up with their assignments and attendance. 

• Final examination: Held some time after the final class meeting. 

• Most universities will also offer some sort of honors degree. To qualify for an honors degree, you must fulfill additional credits or write an honors thesis; precise details depend upon the university and/or academic department. 

• The individual courses that make up the degree program can be divided into the following types:

• · Core courses: These provide the foundation of the degree program and are required of all students. Students take a variety of courses in mathematics, English, humanities, physical sciences, and social sciences. Some colleges require students to take many core courses, while other schools require only a few.

• · Major courses: A major is the subject in which a student chooses to concentrate. Most students major in one subject; however, some colleges offer the option of pursuing a double major with a related subject. Your major courses represent one-quarter to one-half of the total number of courses required to complete a degree.

• · Minor courses: A minor is a subject in which a student may choose to take the second greatest concentration of courses. The number of courses required for a minor tends to be half the number of major courses.

• · Elective courses: These courses may be chosen from any department. They offer opportunities to explore other topics or subjects you may be interested in and help make up the total number of credits required to graduate.

• An important indicator of the quality of any U.S. college or university is its accreditation status. Unlike many other countries, the United States does not have a central government office that approves educational institutions. Instead, it relies on a system of voluntary accreditation carried out by non-governmental accrediting bodies to ensure that schools meet standards. 

• Most U.S. colleges offer students a variety of social, cultural, and sports activities in addition to their academic programs. The level to which each is emphasized will determine the social environment you will find on your campus. You should also consider whether the majority of the students live on or off a university campus. At colleges referred to as commuter schools, most students live off campus and commute to classes.

• A unique feature of U.S. campus life is the Greek system, which offers students the choice of joining a fraternity or sorority. (The term "Greek" is used because the names of fraternities and sororities are composed of two or three Greek letters.) Fraternities (male) and sororities (female) can be the focus of undergraduate social life on many U.S. campuses. However, as well as holding parties, fraternities and sororities often sponsor activities.

• U.S. universities offer many opportunities for students to develop skills through extracurricular activities such as sports teams, academic clubs, university newspapers, drama productions, and other rewarding programs.

• Rankings - There is no official list of the top 10, 20, 50, or even 100 universities in the United States. The U.S. government does not rank universities. Rankings that you come across are usually produced by journalists and are likely to be subjective.

• Internship or Overseas Study Programs - Many U.S. universities have incorporated into their curriculum internship (voluntary or paid work placements) or overseas study ("study abroad") programs.

• Master's Degree: This degree is usually required in fields such as library science, engineering, or social work. The M.B.A., or Master of Business Administration, is an extremely popular degree that usually takes two years. Some Master's programs, such as journalism, only take one year. 

• Doctorate (Ph.D.): Many graduate schools consider the Master's Degree as the first step towards attaining the Ph.D. (doctorate). But at other schools, students may prepare directly for the doctorate without also earning a Master's Degree. It may take three years or more to earn the Ph.D. Degree.

• For the first two years, most doctoral candidates enroll in classes and seminars. For at least another year, students will conduct firsthand research and write a thesis or dissertation. This paper must contain views, designs, or research that have not been previously published. 

Class Format:

• The Lecture - This is perhaps the most common university class format.  In a lecture class, the professor usually teaches according to a prepared outline (syllabus).  During the lecture, which may be supplemented by films or other visual materials, it is important for you to take notes and write down the information emphasized by the professor.  This information will most likely be included on the course examination.  Since lecture classes are usually large (ranging in size from 25-50 or more students), any questions you ask should be directly related to the content being discussed.

• The Independent Study - This type of course is usually available to upper-classmen or graduate-level students.  You decide what you want to study and design a plan with a faculty member.  You must find a faculty member to supervise and evaluate your activity.  The requirements of the independent study most often include extensive reading, research or experimentation on a specific subject which will lead to a written report at the end of the semester.  This, however, is an individual decision between you and a faculty member.

• The Lecture/Discussion - Many large lecture courses offer you smaller once-a-week discussion groups which provide you with the opportunity to ask more detailed questions and to discuss the topics being covered in class.  This discussion group is usually led by the professor or a graduate assistant and is designed to help you understand the material covered in the lecture.

• The Lab - The laboratory (lab) classes are important part of many science and computer courses.  The lab is used to apply the theories learned in the classroom to practical problems.  A lab usually meets once a week for several hours during which time you work on various projects and experiments.  Since the lab is conducted in addition to the regular class, you usually receive one extra academic credit for this work.  The lab is usually kept separate for registration, testing and grading process.

• The Seminar - A Seminar consists of a small group of students (usually fewer than 20) and is primarily designed for upper-division and graduate-level courses.  This type of class involves open discussions and you are often required to prepare presentations for the seminar based on your independent study or research.  Another type of seminar is one which involves listening to a speaker and is for personal enrichment.  In this instance, all that is required is your attendance.

• Grades

A-    Superior 
B-    Above average 
C-    Average 
D-    Passing but below average 
F-     Failure-no credit give 

• Regular class attendance is required by the University.  You are responsible for class attendance and any work you miss due to absence.

The American Economy

• Monetary policy is the responsibility of the Federal Reserve System, an independent U.S. government agency. "The Fed," as it is commonly known, includes 12 regional Federal Reserve Banks and 25 Federal Reserve Bank branches.

• Money takes many different forms, in its most basic form, money consists of coins and paper currency. Coins come in various denominations based on the value of a dollar: the penny, which is worth one cent or one-hundredth of a dollar; the nickel, five cents; the dime, 10 cents; the quarter, 25 cents; the half dollar, 50 cents; and the dollar coin. Paper money comes in denominations of $1, $2, $5, $10, $20, $50, and $100.

• A more important component of the money supply consists of checking deposits, or bookkeeping entries held in banks and other financial institutions. Individuals can make payments by writing checks, which essentially instruct their banks to pay given sums to the checks' recipients. Time deposits are similar to checking deposits except the owner agrees to leave the sum on deposit for a specified period. Money also includes money market funds, which are shares in pools of short-term securities, as well as a variety of other assets that can be converted easily into currency on short notice.

How the U.S. Economy Works:

• The United States is often described as a "capitalist" economy, a term coined by 19th-century German economist and social theorist Karl Marx to describe a system in which a small group of people who control large amounts of money, or capital, make the most important economic decisions. Marx contrasted capitalist economies to "socialist" ones, which vest more power in the political system.

• The American economy is perhaps better described as a "mixed" economy, with government playing an important role along with private enterprise.

• The United States is rich in mineral resources and fertile farm soil, and it is blessed with a moderate climate. 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 -- five large, inland lakes along the U.S. border with Canada -- provide additional shipping access. These extensive waterways have helped shape the country's economic growth over the years and helped bind America's 50 individual states together in a single economic unit.

• The number of available workers and, more importantly, their productivity help determine the health of an economy. Throughout its history, the United States has experienced steady growth in the labor force, and that, in turn, has helped fuel almost constant economic expansion. Until shortly after World War I, most workers were immigrants from Europe, their immediate descendants, or African-Americans whose ancestors were brought to the Americas as slaves. 

• The United States is said to have a mixed economy because privately owned businesses and government both play important roles. 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 government and business).

• This emphasis on private ownership arises, in part, from American beliefs about personal freedom. From the time the nation was created, Americans have feared excessive government power, and they have sought to limit government's authority over individuals -- including its role in the economy.

• There are limits to free enterprise, however. Americans have always believed that some services are better performed by public rather than private enterprise. For instance, in the United States, government is primarily responsible for the administration of justice, education (although there are many private schools and training centers), the road system, social statistical reporting, and national defense. In addition, government often is asked to intervene in the economy to correct situations in which the price system does not work. It regulates "natural monopolies," for example, and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces.

• Government also provides welfare and unemployment benefits to people who cannot support themselves, either because they encounter problems in their personal lives or lose their jobs as a result of economic upheaval; it pays much of the cost of medical care for the aged and those who live in poverty; it regulates private industry to limit air and water pollution; it provides low-cost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise to handle.

Government's Role in the Economy:

• Stabilization and Growth. Perhaps most importantly, the federal government guides the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy), it can slow down or speed up the economy's rate of growth -- in the process, affecting the level of prices and employment.

• Regulation and Control. The U.S. federal government regulates private enterprise in numerous ways. Regulation falls into two general categories. Economic regulation seeks, either directly or indirectly, to control prices. Traditionally, the government has sought to prevent monopolies such as electric utilities from raising prices beyond the level that would ensure them reasonable profits. Another form of economic regulation, antitrust law, seeks to strengthen market forces so that direct regulation is unnecessary. The government -- and, sometimes, private parties -- have used antitrust law to prohibit practices or mergers that would unduly limit competition.

• Direct Services. Each level of government provides many direct services. The federal government, for example, is responsible for national defense, 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. State governments, meanwhile, are responsible for the construction and maintenance of most highways. State, county, or city governments play the leading role in financing and operating public schools. Local governments are primarily responsible for police and fire protection.

• Growth of Government Intervention. Many laws and regulations have been enacted since the 1930s to protect workers and consumers further. It is against the law for employers to discriminate in hiring on the basis of age, sex, race, or religious belief. Child labor generally is prohibited. Independent labor unions are guaranteed the right to organize, bargain, and strike. The government issues and enforces workplace safety and health codes. Nearly every product sold in the United States is affected by some kind of government regulation: food manufacturers must tell exactly what is in a can or box or jar; no drug can be sold until it is thoroughly tested; automobiles must be built according to safety standards and must meet pollution standards; prices for goods must be clearly marked; and advertisers cannot mislead consumers.

The U.S. Economy: A Brief History:

• The modern American economy traces its roots to the quest of European settlers for economic gain in the 16th, 17th, and 18th centuries. The New World then progressed from a marginally successful colonial economy to a small, independent farming economy and, eventually, to a highly complex industrial economy. During this evolution, the United States developed ever more complex institutions to match its growth. And while government involvement in the economy has been a consistent theme, the extent of that involvement generally has increased.

• North America's first inhabitants were Native Americans -- indigenous peoples who are believed to have traveled to America about 20,000 years earlier across a land bridge from Asia, where the Bering Strait is today. (They were mistakenly called "Indians" by European explorers, who thought they had reached India when first landing in the Americas.) These native peoples were organized in tribes and, in some cases, confederations of tribes. While they traded among themselves, they had little contact with peoples on other continents, even with other native peoples in South America, before European settlers began arriving. What economic systems they did develop were destroyed by the Europeans who settled their lands.

• In 1492, Christopher Columbus, an Italian sailing under the Spanish flag, set out to find a southwest passage to Asia and discovered a "New World." For the next 100 years, English, Spanish, Portuguese, Dutch, and French explorers sailed from Europe for the New World, looking for gold, riches, honor, and glory. But the North American wilderness offered early explorers little glory and less gold, so most did not stay. The people who eventually did settle North America arrived later. In 1607, a band of Englishmen built the first permanent settlement in what was to become the United States.

• Early settlers had a variety of reasons for seeking a new homeland. The Pilgrims of Massachusetts were pious, self-disciplined English people who wanted to escape religious persecution. Other colonies, such as Virginia, were founded principally as business ventures. Often, though, piety and profits went hand-in-hand.

• By 1770, the North American colonies were ready, both economically and politically, to become part of the emerging self-government movement that had dominated English politics since the time of James I (1603-1625). Disputes developed with England over taxation and other matters; Americans hoped for a modification of English taxes and regulations that would satisfy their demand for more self-government. Few thought the mounting quarrel with the English government would lead to all-out war against the British and to independence for the colonies.

• Like the English political turmoil of the 17th and 18th centuries, the American Revolution (1775-1783) was both political and economic, bolstered by an emerging middle class with a rallying cry of "unalienable rights to life, liberty, and property" -- a phrase openly borrowed from English philosopher John Locke's Second Treatise on Civil Government (1690). The war was triggered by an event in April 1775. British soldiers, intending to capture a colonial arms depot at Concord, Massachusetts, clashed with colonial militiamen. Someone -- no one knows exactly who -- fired a shot, and eight years of fighting began. While political separation from England may not have been the majority of colonists' original goal, independence and the creation of a new nation -- the United States -- was the ultimate result.

• The U.S. Constitution, adopted in 1787 and in effect to this day, was in many ways a work of creative genius. As an economic charter, it established that the entire nation -- stretching then from Maine to Georgia, from the Atlantic Ocean to the Mississippi Valley -- was a unified, or "common," market. There were to be no tariffs or taxes on interstate commerce. The Constitution provided that the federal government could regulate commerce with foreign nations and among the states, establish uniform bankruptcy laws, create money and regulate its value, fix standards of weights and measures, establish post offices and roads, and fix rules governing patents and copyrights. The last-mentioned clause was an early recognition of the importance of "intellectual property," a matter that would assume great importance in trade negotiations in the late 20th century.

• Although early American farmers feared that a national bank would serve the rich at the expense of the poor, the first National Bank of the United States was chartered in 1791; it lasted until 1811, after which a successor bank was chartered.

• The Industrial Revolution began in Europe in the late 18th and early 19th centuries, and it quickly spread to the United States. By 1860, when Abraham Lincoln was elected president, 16 percent of the U.S. population lived in urban areas, and a third of the nation's income came from manufacturing.

• Northern victory in the U.S. Civil War (1861-1865), however, sealed the destiny of the nation and its economic system. The slave-labor system was abolished, making the large southern cotton plantations much less profitable. Northern industry, which had expanded rapidly because of the demands of the war, surged ahead. Industrialists came to dominate many aspects of the nation's life, including social and political affairs. The planter aristocracy of the South, portrayed sentimentally 70 years later in the film classic Gone with the Wind, disappeared.

• The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. An explosion of new discoveries and inventions took place, causing such profound changes that some termed the results a "second industrial revolution." Oil was discovered in western Pennsylvania. The typewriter was developed. Refrigeration railroad cars came into use. The telephone, phonograph, and electric light were invented. And by the dawn of the 20th century, cars were replacing carriages and people were flying in airplanes.

• As the American economy matured in the 20th century, however, the freewheeling business mogul lost luster as an American ideal. The crucial change came with the emergence of the corporation, which appeared first in the railroad industry and then elsewhere. Business barons were replaced by "technocrats," high-salaried managers who became the heads of corporations. The rise of the corporation triggered, in turn, the rise of an organized labor movement that served as a countervailing force to the power and influence of business.

•  The technological revolution of the 1980s and 1990s brought a new entrepreneurial culture that echoes of the age of tycoons. Bill Gates, the head of Microsoft, built an immense fortune developing and selling computer software. Gates carved out an empire so profitable that by the late 1990s, his company was taken into court and accused of intimidating rivals and creating a monopoly by the U.S. Justice Department's antitrust division. But Gates also established a charitable foundation that quickly became the largest of its kind.

The Postwar Economy: 1945-1960:

• Many Americans feared that the end of World War II and the subsequent drop in military spending might bring back the hard times of the Great Depression. But instead, pent-up consumer demand fueled exceptionally strong economic growth in the postwar period. The automobile industry successfully converted back to producing cars, and new industries such as aviation and electronics grew by leaps and bounds. A housing boom, stimulated in part by easily affordable mortgages for returning members of the military, added to the expansion.

• The jump in postwar births, known as the "baby boom," increased the number of consumers. More and more Americans joined the middle class.

• The United States recognized during the postwar period the need to restructure international monetary arrangements, spearheading the creation of the International Monetary Fund and the World Bank -- institutions designed to ensure an open, capitalist international economy.

• Business, meanwhile, entered a period marked by consolidation. Firms merged to create huge, diversified conglomerates. International Telephone and Telegraph, for instance, bought Sheraton Hotels, Continental Banking, Hartford Fire Insurance, Avis Rent-a-Car, and other companies.

• Growing demand for single-family homes and the widespread ownership of cars led many Americans to migrate from central cities to suburbs. Coupled with technological innovations such as the invention of air conditioning, the migration spurred the development of "Sun Belt" cities such as Houston, Atlanta, Miami, and Phoenix in the southern and southwestern states. As new, federally sponsored highways created better access to the suburbs, business patterns began to change as well. Shopping centers multiplied, rising from eight at the end of World War II to 3,840 in 1960. Many industries soon followed, leaving cities for less crowded sites.

Years of Change: The 1960s and 1970s:

• The 1960s and 1970s were a time of great change. New nations emerged around the world, insurgent movements sought to overthrow existing governments, established countries grew to become economic powerhouses that rivaled the United States, and economic relationships came to predominate in a world that increasingly recognized military might could not be the only means of growth and expansion.

• President John F. Kennedy (1961-1963) ushered in a more activist approach to governing. During his 1960 presidential campaign, Kennedy said he would ask Americans to meet the challenges of the "New Frontier." As president, he sought to accelerate economic growth by increasing government spending and cutting taxes, and he pressed for medical help for the elderly, aid for inner cities, and increased funds for education. Many of these proposals were not enacted, although Kennedy's vision of sending Americans abroad to help developing nations did materialize with the creation of the Peace Corps. Kennedy also stepped up American space exploration. After his death, the American space program surpassed Soviet achievements and culminated in the landing of American astronauts on the moon in July 1969.

• Kennedy's assassination in 1963 spurred Congress to enact much of his legislative agenda. His successor, Lyndon Baines Johnson (1963-1969), sought to build a "Great Society" by spreading benefits of America's successful economy to more citizens. Federal spending increased dramatically, as the government launched such new programs as Medicare (health care for the elderly), Food Stamps (food assistance for the poor), and numerous education initiatives (assistance to students as well as grants to schools and colleges).

• Military spending also increased as American's presence in Vietnam grew. What had started as a small military action under Kennedy mushroomed into a major military initiative during Johnson's presidency. Ironically, spending on both wars -- the war on poverty and the fighting war in Vietnam -- contributed to prosperity in the short term. But by the end of the 1960s, the government's failure to raise taxes to pay for these efforts led to accelerating inflation, which eroded this prosperity. The 1973-1974 oil embargo by members of the Organization of Petroleum Exporting Countries (OPEC) pushed energy prices rapidly higher and created shortages. Even after the embargo ended, energy prices stayed high, adding to inflation and eventually causing rising rates of unemployment. Federal budget deficits grew, foreign competition intensified, and the stock market sagged.

• The Vietnam War dragged on until 1975, President Richard Nixon (1969-1973) resigned under a cloud of impeachment charges, and a group of Americans were taken hostage at the U.S. embassy in Teheran and held for more than a year. The nation seemed unable to control events, including economic affairs. America's trade deficit swelled as low-priced and frequently high-quality imports of everything from automobiles to steel to semiconductors flooded into the United States.

• But the most important element in the war against inflation was the Federal Reserve Board, which clamped down hard on the money supply beginning in 1979. By refusing to supply all the money an inflation-ravaged economy wanted, the Fed caused interest rates to rise. As a result, consumer spending and business borrowing slowed abruptly. The economy soon fell into a deep recession.

The Economy in the 1980s:

• The nation endured a deep recession throughout 1982. Business bankruptcies rose 50 percent over the previous year. Farmers were especially hard hit, as agricultural exports declined, crop prices fell, and interest rates rose. But while the medicine of a sharp slowdown was hard to swallow, it did break the destructive cycle in which the economy had been caught. By 1983, inflation had eased, the economy had rebounded, and the United States began a sustained period of economic growth. The annual inflation rate remained under 5 percent throughout most of the 1980s and into the 1990s.

• The American people expressed their discontent with federal policies by turning out Carter in 1980 and electing former Hollywood actor and California governor Ronald Reagan as president. Reagan (1981-1989) based his economic program on the theory of supply-side economics, which advocated reducing tax rates so people could keep more of what they earned.

The 1990s and Beyond:

• The 1990s brought a new president, Bill Clinton (1993-2000). A cautious, moderate Democrat, Clinton sounded some of the same themes as his predecessors. After unsuccessfully urging Congress to enact an ambitious proposal to expand health-insurance coverage, Clinton declared that the era of "big government" was over in America.

• With the fall of the Soviet Union and Eastern European communism in the late 1980s, trade opportunities expanded greatly. Technological developments brought a wide range of sophisticated new electronic products. Innovations in telecommunications and computer networking spawned a vast computer hardware and software industry and revolutionized the way many industries operate. The economy grew rapidly, and corporate earnings rose rapidly. Combined with low inflation and low unemployment, strong profits sent the stock market surging; the Dow Jones Industrial Average, which had stood at just 1,000 in the late 1970s, hit the 11,000 mark in 1999, adding substantially to the wealth of many -- though not all -- Americans.

• Clinton, like his predecessors, had continued to push for elimination of trade barriers. A North American Free Trade Agreement (NAFTA) had further increased economic ties between the United States and its largest trading partners, Canada and Mexico. Asia, which had grown especially rapidly during the 1980s, joined Europe as a major supplier of finished goods and a market for American exports. Sophisticated worldwide telecommunications systems linked the world's financial markets in a way unimaginable even a few years earlier.

• Poverty and Inequality - Americans are proud of their economic system, believing it provides opportunities for all citizens to have good lives. Their faith is clouded, however, by the fact that poverty persists in many parts of the country. Government anti-poverty efforts have made some progress but have not eradicated the problem. Similarly, periods of strong economic growth, which bring more jobs and higher wages, have helped reduce poverty but have not eliminated it entirely.

Tax Policies:

• The federal government's chief source of funds to cover its expenses is the income tax on individuals, which in 1999 brought in about 48 percent of total federal revenues. Payroll taxes, which finance the Social Security and Medicare programs, have become increasingly important as those programs have grown. In 1998, payroll taxes accounted for one-third of all federal revenues; employers and workers each had to pay an amount equal to 7.65 percent of their wages up to $68,400 a year. The federal government raises another 10 percent of its revenue from a tax on corporate profits, while miscellaneous other taxes account for the remainder of its income. (Local governments, in contrast, generally collect most of their tax revenues from property taxes. State governments traditionally have depended on sales and excise taxes, but state income taxes have grown more important since World War II.)

• From the outset, the income tax has been a progressive levy, meaning that rates are higher for people with more income. Most Democrats favor a high degree of progress, arguing that it is only fair to make people with more income pay more in taxes. Many Republicans, however, believe a steeply progressive rate structure discourages people from working and investing, and therefore hurts the overall economy. Accordingly, many Republicans argue for a more uniform rate structure. Some even suggest a uniform, or "flat," tax rate for everybody.

•  Over the years, lawmakers have carved out various exemptions and deductions from the income tax to encourage specific kinds of economic activity. Most notably, taxpayers are allowed to subtract from their taxable income any interest they must pay on loans used to buy homes. Similarly, the government allows lower- and middle-income taxpayers to shelter from taxation certain amounts of money that they save in special Individual Retirement Accounts (IRAs) to meet their retirement expenses and to pay for their children's college education.

• The Tax Reform Act of 1986, perhaps the most substantial reform of the U.S. tax system since the beginning of the income tax, reduced income tax rates while cutting back many popular income tax deductions (the home mortgage deduction and IRA deductions were preserved, however). The Tax Reform Act replaced the previous law's 15 tax brackets, which had a top tax rate of 50 percent, with a system that had only two tax brackets -- 15 percent and 28 percent. Other provisions reduced, or eliminated, income taxes for millions of low-income Americans.

Stocks, Commodities and Markets:

• Historically, virtually every major US city once had a stock market, but by the 1990s there were only three major markets: New York, Chicago, and San Francisco. Local markets persisted in such cities as Boston, Massachusetts, and Philadelphia, Pennsylvania, but trading was limited. 

• The modern markets, particularly those in New York and Chicago, rely heavily on computerization each day to process millions of transactions. But also, in part, it is a matter of tradition and experience. The stock market works largely on one broker's trust in another broker's word. The brokers, in turn depend on the faith of the customers they represent.

• The principles of this market are similar to all others. For every buyer there has to be a seller. When more people wish to buy than to sell, the price tends to rise; when fewer people wish to buy and many wish to sell, the price tends to fall. 

• Once a company has sold its original stock to the public and it is traded freely in the market, the price will be determined continuously during the trading day by what buyers will pay and what sellers will take. It is simply a matter of supply and demand.

• When a company makes money it usually pays a part of its earnings to its shareholders in the form of dividends. A typical payout is about 50 percent of the earnings. 

• Each year every stockholder receives an annual report about the company in which he or she has an investment. These annual reports have changed much over the last 20 or 30 years. Previously, the typical report would consist of a general discussion of the health of the company, without any comparisons to previous years. Now virtually all major corporations give very detailed reports. They provide easy-to-read charts and summaries, usually covering a 10-year period. A certified public accounting firm, after performing an audit, certifies that the figures and statements about the finances reflect generally accepted accounting principles. In addition to this information, company executives are required to disclose the extent of their holdings in the company. The entire process is supervised in great detail by the Securities and Exchange Commission (SEC), often described as a "watchdog" agency of the federal government. 

• While there are literally thousands of stocks, the ones bought and sold most actively are usually listed on the New York Stock Exchange (NYSE). The exchange dates back to 1792 when a group of stockbrokers gathered on Wall Street in New York City to make some rules about how buying and selling was to be done. The NYSE has become the leading exchange in the United States, but the American Stock Exchange also operates in the same Wall Street area, and in much the same way, but on a smaller scale. 

• The largest security market in the world in terms of the number of different stocks and bonds traded is the over-the-counter (OTC) market. OTC is not located in any one place, but is primarily an electronic communications network of stock and bond dealers. These stocks are supervised by the National Association of Securities Dealers, Inc., which has the power to expel companies or dealers determined to be dishonest or insolvent. The over-the-counter market tends to get stocks of smaller companies, and by the 1990s had come to be known as a market where many of the fastest growing "high-technology" stocks could be bought and sold.

• The prices of commodities -- such as crops, livestock and such metals as copper, gold, lead and tin -- tend to fluctuate from one period of time to the next. Commodity traders fall into two broad categories: hedgers and speculators. Hedgers are business firms (or individuals) that enter into a commodity contract to be assured access to the commodity at a guaranteed price. A firm secures a needed commodity and is protected against price fluctuation. Thousands of individuals, in contrast, trade in commodity futures as speculators. 

• The main index measuring market activity in the United States is called the Dow-Jones Industrial Average (normally referred to as simply the Dow Jones)