The aim of this book was to introduce the reader to modern macroeconomic theory. The common thread has been the general equilibrium model with competitive markets originally developed by Arrow and Debreu and extended in several directions by subsequent generations of economic theorists. The key aspect of this approach to macroeconomic theorizing is the identification of individual preferences and production possibilities as exogenous data and the prices and allocations as endogenous outcomes of the market interaction. We have shown that the attractive, but sometimes counterfactual, properties of the standard market model can be progressively weakened as different imperfections are added to the model, ranging from borrowing limits to incomplete markets, private information, and strategic interaction. In particular, the efficiency of equilibrium allocation disappears as the trade interaction becomes ridden with imperfections, opening up some room for policy intervention that is otherwise unnecessary. The typical role of policy is to compensate for market imperfection, providing a substitute for missing risk-sharing or consumption smoothing options when everything else fails.