The QPM is a general equilibrium model (GEM) that has its foundation in modern macroeconomic theory. The macroeconomic modelling and forecasting process at the South African Reserve Bank makes use of a suite of models. All models have their specific strengths and weaknesses, and the use of a suite allows the models to complement each other in order to generate better policy outcomes. Over time, the models have evolved along with advances in both econometric theory and computing power. The underlying assumption is that agents in the economy are forward looking, i.e., expectations about the future matter for decisions that are made today. For example, a firm would set the price for the good it produces by taking into account its expectation for future inflation.