Glossary/Neoclassical Economics

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Neoclassical Economics is a broad economic theory which focuses on the effects of supply and demand as explanations for changes in the economy. It treats people, corporations, and other economic or social bodies as "rational", using the phrase "homo economicus". The theory poses that people and corporations are all rational actors who act in their own best interest when making economic decisions.

Neoclassical Economics was first introduced in the early 20th century, and became the dominant microeconomic theory in the United States during the 1950s, known then as neo-Keynesian economics.