support the Keynesian stress on aggregate demand, and also does not provide normative basis for activist government policies of the usual Keynesian type One important function of a macroeconomic model is to isolate the sources of disturbances that cause aggregate business fluctuations. Keynesi analyses focus on shocks to aggregate demand, and typically attribute these shocks either to governmental actions(disruptive or corrective fiscal and monetary policies, or to shifts in private preferences that influence consumption or investment demand. Keynes's own discussion(Keynes, 1935 hapter 12)referred to the I spirits"of businessmen, and the consequent volatility of investment demand due to shifting moods of optimism or pessimism. Thus, aside from governmental actions, the Keynesian model is not strong at pinpointing observable, objective events that cause recessions or boom One reason that Keynes may not have been troubled by this " deficiency" is that he te economy as inherently unstable. It did not take large(and presumably objectively observable)shocks to trigger a recession because even a small shock--when interacting with the multiplier(and, in some models, also the investment accelerator )--could generate a significant and sustained drop in output and employment. Curiously, however, later Keynesian developments deemphasized the multiplier. For example, in the well-known IS/LM model (in which interest rates ad just and matter for aggregate demand)or in Keynesian analyses that incorporate some version of the permanent- income hypothesis, multipliers need not exist. These extensions do improve the model's fit with some facts about business cycles ch as the apparent absence of a multiplie e of output changes in government purchases and the relative stability of consumption