13.6: Conclusion

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This completes the introduction to the theory and modelling needed to study the major performance and policy issues in the macro economy. This approach has integrated household and business expenditure decisions, government taxation, expenditure and budget balances, and the monetary, financial sectors and monetary policy, to explain the causes and effects of business cycle fluctuations in national output and employment. It also defines and explains monetary and fiscal policy stabilization roles for the central bank and the government. The brief discussion of the theory of economic growth puts a longer-term perspective on the changes in standards of living over time. Perhaps most importantly, modelling the macro economy emphasizes the complex linkages and interdependencies that determine the modern industrial economy's responses to aggregate demand and supply disturbances.