  Refractive index and absorption experienced by a probe field propagating
through a three-level atomic medium can be effectively manipulated by the
bistable behavior of a control field. The probe field couples the lower
transition of the atom in ladder configuration and experiences normal or
anomalous dispersion depending on the control field being in the upper or lower
bistable state, respectively. We also obtain nonlinear dynamical instability in
the form of periodic self-pulsing as the lower bistable branch becomes
unstable, quite unlike earlier demonstrations of unstable regime in the upper
branch. Consequently, the susceptibility experienced by the probe field varies
periodically in time dictated by the control field self-pulsing.
