According to the neoclassical economic theory, flexible pricing will eventually stifle any growth in aggregate demand, hence expansionary fiscal policy cannot be used to improve equilibrium output.
The first description of neoclassical economics dates to 1900. According to neoclassical economics, a consumer's first objective should be to maximize personal satisfaction. As a result, they base their purchasing decisions on their evaluations of a product's or service's utility.
fiscally expansive measures. a change in net taxes, an increase in government spending on goods and services, or a combination of the two with the intention of increasing real production and stimulating aggregate demand.
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