what we shall study in Macroeconomics? How are the macroeconomic variables determined? How can we explain unemployment and inflation? What are the affects of a macroeconomic policy? What determine economic growth? Debates in macroeconomics New Classical Macroeconomics Representative Agents optimization Rational Expectation Market clearing New Keynesian Macroeconomics No Representative Agent's optimization No Rational Expectation No Market Clearing2 What we shall study in Macroeconomics? ➢ How are the macroeconomic variables determined? ➢ How can we explain unemployment and inflation? ➢ What are the affects of a macroeconomic policy? ➢ What determine economic growth? Debates in Macroeconomics New Classical Macroeconomics: ➢ Representative Agent’s optimization ➢ Rational Expectation ➢ Market Clearing New Keynesian Macroeconomics ➢ No Representative Agent’s optimization ➢ No Rational Expectation ➢ No Market Clearing