The Price Point

As Stuyvesant students prepare to enter the world, understanding the economy becomes an essential skill. In today’s society, knowledge of economics provides us with a foundation for navigating financial issues, understanding the effects of public policy on the market, and making informed decisions about our own personal finances.

Mexico’s Central Bank Cuts Interest Rates by 50 Basis Points

On Thursday, March 27, the Bank of Mexico (Banxico) unanimously agreed to cut interest rates by 50 basis points (half of a percentage point). This cut continues Banxico’s trend of rate cuts and brings the country’s currency rate to the lowest it has been since September 2022. Apart from combating inflation—which has been very successful, according to Banxico—these cuts indicate a level of economic uncertainty regarding trade relations as a result of President Trump’s tariff policies. Although the battle against inflation has stayed on track, such cuts come with concerns about recession or a weakened economy.

President Trump Announces 25 Percent Auto Tariff

Trump has recently announced a plan to impose a 25 percent tariff on all automobiles and car parts imported into the United States. Through these tariffs, he plans to raise around $100 billion a year, domesticate production, and create more jobs for automakers in the U.S. However, this poses a threat to many domestic manufacturers, since automakers in the U.S. tend to obtain car components through foreign imports and the global auto trade. These tariffs would also cause car manufacturers to raise prices, putting pressure on consumers and preventing them from buying new cars.

German Unemployment Rate Rises to 6.3 Percent

Germany’s adjusted unemployment rate rose to 6.3 percent in March—an increase from 6.2 percent in February—due to accelerated layoffs in major companies such as Siemens and Volkswagen. This increase in layoffs came as a result of rising energy prices and trade tensions related to Trump’s tariff policies. As the country with the largest economy in Europe, Germany’s condition could indicate a larger trend in the continent’s economic state.

Economics Concept of the Issue

Capitalism

Capitalism is an economic system in which individuals or privately owned businesses control the means of production, meaning that they can decide what to do without government interference. It relies on a free market and the power of supply and demand to drive the economy, as well as the fact that individuals and businesses will compete and act in their own interests—ideas that originated from Scottish philosopher Adam Smith. In a capitalist economy, consumers have a variety of goods to choose from and are able to make free decisions but also face significant wealth disparity.