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Microfoundations are the fundamentals on the basis of which macroeconomic theories are formulated. These are formed through the analysis of the behaviour of individual economic agents/ units like individuals, households, firms etc. The aggregate computation method that was used in early microeconomic theories to compare and establish the relationship between aggregate values like aggregate output, consumption and investment was hotly debated by the proponents and opponents of the economic model. Their inconsistency with basic microeconomic principles was the major bone of contention as economists were quick to point out that the Keynesian approach to microeconomics was faulty at some parts. The matter was resolved with modern macroeconomists attempting to combine microeconomic models of household and firm behaviour to derive the relationships between macroeconomic variables and formulating macroeconomic models. Economists aggregate microeconomic models to cross examine them with macroeconomic models from different points of view. Perhaps the two most important microfoundation led developments in the field of macroeconomics have been the intertemporal consumption theory and the rational expectations theory.
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