Suppose a war causes a sudden,

Classical model: A classical model runs onmoney neutrality i.e. in a classical model an increase in the moneysupply or government purchase will only increase the price of thegood leaving the actual GDP unchanged. The economy runs at apotential level all the time and any increase or decrease in thedemand will only affect the nominal price of the things. Employmentlevel will remain the same and the output will be unchanged at apotential level only the nominal value of things will change.

A Keynesian model: In a Keynesian model, thewages are sticky i.e. they don’t change in the short run. Withincreased government expenditure the prices of the good in theeconomy will change this will decrease the real wage of the laborand firms will hire more and increase the production in the shortrun. This will increase the output of the economy and increase theGDP. More people will get employment and prices will be high.