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The New Classical School

帮考网校2020-08-05 15:36:35

The New Classical School is a school of economic thought that emerged in the 1970s as a response to Keynesian economics. It is also known as the "neoclassical synthesis" or "new neoclassical economics."

The New Classical School emphasizes the importance of market forces and the role of individuals in making economic decisions. It argues that the market is self-correcting and that government intervention can often do more harm than good.

One of the key ideas of the New Classical School is the concept of rational expectations. This means that individuals make decisions based on their expectations of the future, and these expectations are based on all available information. Therefore, government policies that try to manipulate the economy will be ineffective because individuals will adjust their behavior accordingly.

Another important idea of the New Classical School is the concept of the natural rate of unemployment. This is the rate of unemployment that exists when the economy is at its potential output level. Any attempt to reduce unemployment below this level through government intervention will only lead to inflation.

The New Classical School has been criticized for its assumptions of perfect information and rationality, which many argue do not accurately reflect real-world behavior. However, it remains an important school of economic thought and has had a significant impact on macroeconomic policy.

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The New Classical School

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