To achieve external balance and correct a recession,a nation will always have to use tight monetary policy if at the full employment level of national income the nation's
BP curve is:

Question

Quizplus · Accepted Answer

When the BP curve is above the LM curve, the nation is experiencing a recession. To correct this, the central bank will need to tighten monetary policy to increase interest rates and reduce aggregate demand.

To Achieve External Balance and Correct a Recession,a Nation Will