This course develops the analytical tools to study short-run fluctuations in aggregate economic activities. We emphasize the micro-foundations of macroeconomics and investigate the determinants of consumption, saving, investment, labor demand and labor supply. We derive the IS-LM and AD-AS frameworks and use these frameworks to understand why the economy goes through booms and busts. We also discuss different theories of the business cycles, such as the Keynesian and the Real Business Cycle theories. In particular, we examine their assumptions and policy implications for macroeconomic stabilisation.