### New Classical School (Rational Expectation Theory)

**New classical school (Rational expectation theory)**

*- Rational expectation theory on quantity theory of money*

*- Rational version on quantity theory of money*

*- Radicalist version on quantity theory of money*

*- Radicalist version on quantity theory of money*

*- Lucas version on quantity theory of money*

The term rational expectation is used in economics only since 1961 by

**John Muth**(American economist) by publishing an article “

**”. So, he is also considered as the father of rational expectation revolution.**

*Rational expectation and price movement*But, the concept and term “

**” is widely used, highly developed and made more popular by an American economist Robert Lucas in 1972 by publishing an article called “**

*Rational expectation***” and award Nobel prize in**

*Expectation and neutrality of money***1995.**

**is also known as the lender of new classical school of economic thought.**

*Lucas*The theory says that peop…