Introduction to Macroeconomics

Abstract

The remainder of this book is devoted to macroeconomic issues in recognition of the fact that the behaviour exhibited by firms, regardless of their industry, reflects the characteristics of the economy within which they operate and the measures taken by the government in response to any fluctuations in the performance of that economy. This and the following chapter are policy-oriented. Chapter 7 is a facilitating chapter that identifies some of the key principles that underpin macroeconomic analysis and the relationships that exist between different macroeconomic variables. Based upon this foundation, Chapter 8 focuses explicitly on how changes in postwar government policy have affected the construction industry. It will be seen that the postwar era can be divided into two discrete periods. The first, 1945 to the mid-1970s, was a period when governments were prepared to intervene actively in their economies in order to rectify shortfalls in employment (and hence economic activity), which was deemed to be economically and politically unacceptable. The second period, which takes us to the present day, reflects a changed political and economic philosophy that has resulted in the government attempting to reduce the role of the state in the economy and correct the underlying structural deficiencies that characterise the British economy.