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After reading this chapter, you should be able to:

1. Describe alternative perspectives on the causes of macroeconomic instability, including the views of mainstream economists, monetarists, real-business-cycle advocates, and proponents of coordination failures.
2. Explain what the equation of exchange is and how it relates to "monetarism."
3. Discuss why new classical economists believe the economy will "self-correct" from aggregate demand and aggregate supply shocks.
4. Identify and describe the variations of the debate over "rules" versus "discretion" in conducting stabilization policy.