The other school of thought consists of the classical, new classical and monetarist economists who support the minimization of the government intervention in the economic activities. They think that government's role is to control the money supply and make the future expected expansions known to the public in order to reduce the inflation and has nothing to do with the demand. In addition this theory impose policies in favour of free markets.
For both schools of thought the 'equilibrium' is fundamental whereas their interpretation is different. For Keynesian economists the equilibrium expresses a situation where there is no tendency for change ,while for the liberals the equilibrium is a situation where the supply equals the demand.
The question now is how does the monetary policies affect the real GDP according to these schools of thought?
The Keynesian economists think that the monetary expansions rise the supply of loanable funds and that cause the decrease of the interest rate. The lower rates cause increase in the expenditures on investment and as a result the real GDP grows. They do not believe that the economy is always near the natural level of real GDP.
On the other side, the monetarists argue that the money demand is stable and not easily affected to changes in the interest rates. In the short-run they support that the monetary expansions may increase the real GDP by increasing the aggregate demand. For them, the economy is not at or near the full level of real GDP except in the long-term where economy is operating at the full employment level of the GDP. In this case, monetary expansions can lead to persistent inflation (deflation: when the growth rate of GDP has a negative sign) and not to changes in the real GDP.
Stabilization of economy imposing macroeconomic policies
The appropriate macroeconomic policy can dampen the business cycle but do not eliminate it. It is observed that the macroeconomic policies that the government impose, have important influence to the short-term fluctuation of the output and the employment and as a result to the alleviation of the cycle :
1)Mainly directly through the government expenditures
2)Indirectly through the adjustment of the equilibrium between the consumption and the savings level (imposing taxes and monetary policies)
In order to avoid the intense fluctuations of the output and the employment the government can impose fiscal policies and 'automatic stabilizers' such as taxes and unemployment benefits. If the economy entries the recession period, the output and the unemployment increase. The unemployment benefits secure an income for the unemployed workers which bolster the aggregate demand from a sharp decrease of the income.(责任编辑：BUG)