"Born out of 15 years of teaching by Edouard Challe at institutions in France, the UK, and US, this textbook presents the basic tools for analyzing macroeconomic fluctuations and policies. Intended for students who will either go on to graduate study in economics or move directly to real-world jobs in banking, business, or government, the book applies these tools to a number of concrete issues that are encountered today. Challe uses a unified New Keynesian framework, used most commonly by academic researchers and central bankers. After a general introduction presenting some empirical and methodological elements, the book is divided into four parts. Part I provides the foundations of the modern theory of business-cycle fluctuations through the notions of aggregate demand and aggregate supply. Part II turns to the regular business cycle: it first examines how aggregate demand and supply interact and propagate the impact of macroeconomic shocks, and then pays special attention to the workings of the labor market over the business cycle. Part III is devoted to conventional macroeconomic policies: monetary policy and fiscal policy. Part IV, on the liquidity trap and unconventional macroeconomic policies, has been specifically revised for this English edition. It discusses how the US fell into financial crisis and how the crisis spread to the rest of the world. It also explores unconventional policy choices made by the US Federal Reserve and the Bank of England. It also discusses unconventional policy ideas like negative interest rates, high inflation targets, and price-level targeting. The book concludes with the study of the effects of fiscal policies and structural reforms in a liquidity trap. Chapters feature end-of-chapter problems, for which solutions will be provided"--