This innovative book presents an original integration of finance into business cycle theory. Robert Krainer begins with a selective review of the major twentieth century theories of macroeconomic fluctuations: the classical model of economic equilibrium under uncertainty, the IS-LM model of income determination that came to challenge the classical system and the new classical model that in turn challenged the IS-LM system. He also reviews two recent developments, namely real business cycle theory and thenew Keynesian models based on monopolistic competition.