Final answer:
The distinguishing feature of the classical IS-LM model compared to the Keynesian IS-LM model is the focus on aggregate supply and long-term economic factors over aggregate demand and short-term business cycles. Keynesians accept some inflation for lower unemployment, a trade-off not acknowledged by classical economists.
Step-by-step explanation:
The main feature that distinguishes the classical IS-LM model from the Keynesian IS-LM model is its emphasis on aggregate supply in the marketplace. The classical or neoclassical model focuses on long-term economic growth and the functioning of labor markets, attributing changes in output and employment to these fundamental factors. In contrast, the Keynesian perspective is more concerned with aggregate demand and its role in business cycles, highlighting the significance of wage and price rigidity. Consequently, the Keynesian approach is adept at explaining fluctuations in cyclical unemployment during recessions, while the classical model is less useful during short-term economic downturns, such as the 1930s Great Depression.
Furthermore, from an inflation standpoint, Keynesian economics may regard inflation as an acceptable trade-off for reduced unemployment, whereas classical economics views inflation solely as a detriment with no compensating benefits.