How do macroeconomic policies implemented by governments influence the business cycle, and what are the potential trade-offs involved in using tools such as fiscal policy and monetary policy to stabilize the economy?

Macroeconomic policies influence the business cycle by regulating demand through fiscal policies (government spending and taxation) and monetary policies (control of money supply and interest rates). Fiscal policy can stimulate or cool down the economy but may lead to budget deficits. Monetary policy can control inflation but may cause interest rate fluctuations.

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