Can printing money with simultaneous government intervention to increase supply prevent inflation? Just as above...If we print money and simultaneously introduce some sort of government intervention in order to increase supply/ production, then supply and demand would be 'balanced' and therefore price wouldn't go up. I must be missing something, can anyone tell me what it is?
Yes it can. There is nothing wrong in the above. The money market equilibrium is given by equation of exchange (See Mankiw Macroeconomics pp 87) as:
$$MV=PY$$
Where $M$ is the money supply, $V$ velocity of money, $P$ price level and $Y$ output.
Solving for price level and log-linearizing we get:
$$\ln P = \ln M + \ln V - \ln Y $$
Consequently, ceteris paribus, if $M$ increases by $1\%$ and $Y$ increases also by $1\%$ then the net effect on price level will be zero. The crucial assumption is of course that $V$ remains constant otherwise there could still by inflation/deflation.
However, this is not because this would balance supply and demand - or at least not as understood in econ jargon. When people talk about balancing supply and demand they just talk about them being in the equilibrium. Aggregate supply and demand can be in equilibrium even if inflation increases. Rather here it would be more appropriate to say that both supply and demand shift to the right by amount that makes leaves the price unchanged.