• Macroeconomic policy that advocates intervention C. involves the use of monetary and fiscal policy to smooth out the business cycle.

Government intervention supporters support the use of policies to compensate for imperfections that cause imbalances in the economy. Demand and supply are often not sufficient to restore the economy to equilibrium. Therefore, the government has to pass various monetary and fiscal policies to restore the economy to equilibrium. In periods of an economic downturn that may lead to a recession or depression, the government passes expansionary policies to reduce unemployment and boost investment, thus stimulating economic growth. When the economy experiences an expansion, contractionary policies are passed.