New classical economics ppt

Here is a comprehensive PPT on New Classical Economics:

Slide 1: Introduction

• Title: New Classical Economics
• Subtitle: A Review of the Key Concepts and Theories
• Image: A graph showing the relationship between inflation and unemployment

Slide 2: Definition

• Definition: New Classical Economics is a school of thought that emerged in the 1970s as a response to the failures of Keynesian economics.
• Key features: Emphasis on individual decision-making, free markets, and the importance of microfoundations.

Slide 3: Microfoundations

• Definition: Microfoundations refer to the study of individual economic behavior and the underlying microeconomic mechanisms that drive macroeconomic outcomes.
• Importance: Microfoundations provide a more accurate and nuanced understanding of economic phenomena, allowing for more precise policy prescriptions.

Slide 4: Rational Expectations

• Definition: Rational Expectations is a theory that suggests that individuals form expectations about future economic outcomes based on all available information.
• Key implications: Rational Expectations implies that monetary policy is ineffective in the long run, as individuals will adjust their expectations to reflect the policy.

Slide 5: The Lucas Critique

• Definition: The Lucas Critique is a concept developed by Robert Lucas, which suggests that economic models are only valid if they are based on microfoundations and are consistent with the behavior of individual economic agents.
• Importance: The Lucas Critique highlights the importance of microfoundations and the need for more accurate and nuanced economic models.

Slide 6: Real Business Cycle Theory

• Definition: Real Business Cycle Theory is a theory that suggests that business cycles are caused by real shocks, such as changes in technology or productivity, rather than monetary policy.
• Key features: Emphasis on the importance of technological progress, the role of human capital, and the need for a more nuanced understanding of the business cycle.

Slide 7: New Keynesian Economics

• Definition: New Keynesian Economics is a school of thought that combines elements of New Classical Economics with Keynesian economics.
• Key features: Emphasis on the importance of sticky prices and wages, the role of monetary policy, and the need for a more nuanced understanding of the business cycle.

Slide 8: The Role of Monetary Policy

• Definition: Monetary policy refers to the actions of a central bank to control the money supply and interest rates.
• Key implications: New Classical Economics suggests that monetary policy is ineffective in the long run, as individuals will adjust their expectations to reflect the policy.

Slide 9: The Role of Fiscal Policy

• Definition: Fiscal policy refers to the actions of a government to control the level of government spending and taxation.
• Key implications: New Classical Economics suggests that fiscal policy is also ineffective in the long run, as individuals will adjust their expectations to reflect the policy.

Slide 10: Conclusion

• Summary: New Classical Economics is a school of thought that emphasizes the importance of individual decision-making, free markets, and microfoundations.
• Key takeaways: The importance of microfoundations, the limitations of monetary and fiscal policy, and the need for a more nuanced understanding of the business cycle.

Slide 11: References

• List of sources used in the presentation, including academic articles and books.