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Showing posts with the label Balancing Act: Understanding Equilibrium Output and Employment

U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook

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📉 U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook As 2025 unfolds, the U.S. economy is showing signs of strain amid a global slowdown and heightened trade barriers. Here's a detailed look at the latest forecasts and implications based on insights from the OECD, Federal Reserve, and key market indicators . 📊 1. U.S. Growth Forecast Downgraded by OECD The Organisation for Economic Co-operation and Development (OECD) has revised the U.S. GDP growth forecast for 2025 to 1.6% , down from 2.8% in 2024 . The forecast for 2026 remains muted at 1.5% , reflecting persistent uncertainty driven by: Elevated trade barriers Reduced consumer spending power Sluggish business investment 💸 2. Tariffs Fueling Inflation & Trade Costs The average U.S. tariff rate has climbed to 15.4% , the highest level since 1938 . These tariffs have raised import costs, which are now being passed on to consumers: Projected consumer price inflation is expected to rise to...
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Balancing Act: Understanding Equilibrium Output and Employment

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In the intricate dance of economics, achieving equilibrium output and employment stands as a central goal. But what exactly does this balance entail, and how is it achieved? In this post, we'll explore the concept of equilibrium output and employment, unravel its significance in economic theory, and understand the factors that influence its attainment. Equilibrium Output and Employment: Finding the Sweet Spot Equilibrium output, also known as potential output or full employment output, refers to the level of production at which the economy operates at its maximum sustainable capacity without generating inflationary or recessionary pressures. Similarly, equilibrium employment represents the level of employment where the labor market clears, with the supply of labor matching the demand for labor at prevailing wage rates. Factors Influencing Equilibrium Output and Employment Several factors influence the attainment of equilibrium output and employment: Aggregate Demand and Aggregate S...
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