New Classical Macroeconomics

New Classical Macroeconomics is an economic theory that emphasizes the idea that markets are efficient and individuals make rational decisions based on available information. It argues that prices and wages adjust quickly to changes in supply and demand, which helps the economy stabilize. This approach often relies on the concept of “rational expectations,” where people anticipate future economic conditions and act accordingly. As a result, policies like fiscal stimulus may be less effective than expected because people adjust their behavior in anticipation, undermining the intended effect of such measures on the economy.