concept of new classical school and new keynesian
New Keynesian economics Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. But the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition[1] in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions.
Laissez-faire The doctrine of laissez-faire became an integral part of nineteenth-century European liberalism.[13] Just as liberals supported freedom of thought in the intellectual sphere, so were they equally prepared to champion the principles of free trade and free competition in the sphere of economics. The state was to be merely a passive policeman, protecting private property and administering justice, but not interfering with the affairs of its citizens. Businessmen and particularly British industrialists were quick to associate these principles with their own economic interests.[13] Many of the ideas of the physiocrats spread throughout Europe and were adopted to a greater or lesser extent in Sweden, Tuscany, Spain and after 1776 in the newly created United States. Adam Smith, author of The Wealth of Nations, met Quesnay and acknowledged his influence.[28]