Traditional macroeconomic stabilization policies seek to moderate swings in economic activity through measures that primarily augment aggregate demand. Such measures are, however, inadequate in mitigating the comprehensive effects of crisis such as the COVID-19, which affects both the demand and supply sides of the economy. Moreover, monetary policies are presently close to a liquidity trap combined with weakened transmission links to the real economy. Fiscal policies have been reactivated, albeit in an ad hoc and experimental manner. Based on a literature review and the policy responses following the COVID-19 crisis, the objective is to present a modified and extended framework for stabilization policies. In particular, the importance of microeconomic supply-side measures that promote entrepreneurial processes and knowledge-upgrading efforts are emphasized. Furthermore, a coherent realigning of policies at the micro- and macro-levels is argued to enhance the potential for long-term growth and to facilitate the restructuring of an economy that normally follows a crisis. Plain English Summary The COVID-19 crisis makes traditional stabilization policies obsolete. Reinstate the market and redirect policy from interest rates and unconditional state support toward providing employees and firms with adequate knowledge for future challenges. Traditional crises policies seek to moderate swings in economic activity by primarily lowering interest rates and increase governmental expenditure to stimulate demand and economic activity. However, the effectiveness of both of these measures has been questioned, in particular, further reductions in already extremely low-interest rates. The present COVID-19 crisis has highlighted the importance of taking firms, entrepreneurs, trade, etc., into account, i.e., the supply side of the economy. It is argued that traditional policies should partly be replaced by measures targeting entrepreneurial processes, firm growth, innovation, and knowledge upgrading. Corporate taxes should be used to increase firms’ crisis resilience, increase investment, and encourage start-ups, while state support should be conditioned on employees engaging in knowledge upgrading. Hence, the main conclusion of this study is that such redirection of policies will more effectively level out swings in the business cycle, increase the potential for long-term growth, and make it easier for employees and firms to adjust to new economic conditions.