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.

US Dollar Falls by Eight Percent This Year

The ICE U.S. Dollar Index reached almost an eight percent drop this year on Tuesday, April 15, a decline in performance when measured against other currencies like the yen and the euro—in part as a result of the Trump administration’s trade policies. As the primary currency used in the global market, the U.S. dollar’s drop in performance is likely to have a significant impact on the economies of many different countries, especially those with small foreign companies.

Countries Vow to Buy More American Goods

As a response to President Trump’s series of reciprocal tariffs, which were implemented due to U.S. trade deficits with other countries, leaders around the world have promised to buy more American goods in order to improve this deficit. For example, Vietnam faced tariffs reaching 46 percent due to their surplus of more than $120 billion with the U.S.. In addition, on Thursday, April 17, he said that he would have “very little problem” in reducing tariffs for the European Union in exchange for more balanced trade.

Trump Discusses Termination of Fed Chair Powell

On Thursday, April 17, President Trump posted on Truth Social that “[Federal Reserve Chairman Jerome Powell’s] termination cannot come fast enough.” Although Powell has declared that he cannot be legally fired until the end of his term in May of 2026, White House economic adviser Kevin Hassett stated that they have been looking into whether Powell can be removed. Later, during a question-and-answer session with reporters on Friday, April 18, Trump called for Powell to bring interest rates down. He took another swipe at the Fed on April 27, saying that he knows much more about interest rates himself.

Economics Concept of the Issue

Prospect Theory

Prospect theory is an unconventional theory of behavioral economics that was developed by Daniel Kahneman and Amos Tversky in 1979, challenging traditional economic thought and showing that decisions made with certainty are not as rational as suggested in the past. Instead, choices are influenced by different psychological concepts such as loss aversion—which says that people try to avoid losses more than they wish to achieve gains—and reference points, which are standards people use to evaluate relative gain or loss. The theory explains why people make irrational decisions when faced with situations regarding gains and losses.