The module will begin by reviewing theso-called modern approach to aggregate demand and aggregate supply. Thisentails incorporating into the classical approach to aggregate supply andaggregate demand insights from Keynesian economics. This will serve as a baseto discuss the role of macroeconomic policy in controlling fluctuations inoutput and employment. In particular, the module will focus on introducing themodern theory of expectations and economic dynamics and on using this approachto analyse long run fluctuations. The module also aims at s tudying therole of macroeconomic policy on long run fluctuations .