This book is about macroeconomics and about the debates between economists who do macroeconomics. The idea of a separate subject that distinguishes macroeconomics from microeconomics did not take shape until the 1930’s when John Maynard Keynes wrote a book called the General Theory of Employment Interest and Money. Keynes tried to explain the working of the economy as a whole. How is employment related to prices? How are prices and employment influenced by government policies? And above all, what can the government do to maintain full employment? Keynes answered these questions using methods that were very different from those used by microeconomists of his day and the novelty of his approach led to the development of two separate subjects, macroeconomics and microeconomics, that remained unconnected for thirty years. More recently economists have recognized that the methods used to study the behavior of individual producers and consumers in markets (microeconomics) can also be used to study the working of the economy as a whole (macroeconomics). This book explains the modern approach that treats macroeconomics and microeconomics as different parts of one subject that uses a single method of analysis...

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