1. The chapter presents an overview of Real Business Cycle theory and New Keynesian economics. 2. Real Business Cycle theory views fluctuations as optimal responses to exogenous productivity shocks, while New Keynesian economics sees deviations from full employment due to sticky wages and prices. 3. There is debate around issues in Real Business Cycle theory like the flexibility of prices and whether fluctuations truly reflect voluntary changes, as well as debate around explanations for price stickiness in New Keynesian economics.