Suppose the Spending Habits of Consumers Suddenly Change So That

question 253

Essay

Suppose the spending habits of consumers suddenly change so that consumption growth increases. What should the central bank do to restore the economy back to the old equilibrium point? Explain your answer with the aid of an AD-AS diagram.

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Definitions:

Narcissistic Personality Disorder

A mental condition characterized by a long-term pattern of exaggerated self-importance, need for excessive attention and admiration, and lack of empathy for others.

Antisocial Personality Disorder

A mental condition in which a person consistently shows no regard for right and wrong and ignores the rights and feelings of others.

Disregard For Rights

A pattern of behavior that shows a lack of respect or concern for the rights and feelings of others, often seen in antisocial personality disorder.

Histrionic Personality Disorder

A personality disorder in which an individual displays a pattern of excessive emotionality and attention seeking. Once called hysterical personality disorder.