Microeconomics Essay Example | Topics and Well Written Essays - 250 words - 2

Microeconomics - Essay Example However, the situation is beneficial to the country in the long term. Currently, US citizens have to cope with high interest rates and high mortgage rates due to the country’s account deficit. The current situation may indicate that the country’s rate of investment is exceeding its GDP. Investment is not a bad thing for the country although it might cause short-term financial strains on the citizens and unfavorable trade balance (Barschel, 2007). However, long-term benefits may propel US to high levels of economic performance. None of the current economic solutions can be applied to reverse the situation. In order to contain the situation, the government needs to encourage savings and reduce borrowings among its people. This will involve giving people the right education in order to sensitize them on the importance of saving within the country. Increasing tax rates will also reduce borrowing and increase savings. The government also needs to cut the countries imports while it promotes exports. Oil accounts for $140 billion of the total US imports. The government should promote energy conservation and use of alternative energy in order to cuts oil imports and to promote favorable trade