Imagine that an economy experiences a long-lasting banking crisis and that subsequently consumption growth permanently falls. Using the AD-AS model, draw a diagram and explain the effects of the permanent decline in consumption growth on the inflation rate and the real growth rate in both the short run and the long run.

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The Answer of Imagine that an economy experiences a long-lasting banking crisis and that subsequently consumption growth permanently falls. Using the AD-AS model, draw a diagram and explain the effects of the permanent decline in consumption growth on the inflation rate and the real growth rate in both the short run and the long run.

Imagine That an Economy Experiences a Long-Lasting Banking Crisis and That