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Suppose that the economy is well described by the ADAS model with partially sticky prices. There is one change though. Productivity follows a persistent process. That is, current changes in productivity last several periods before returning to its steady state level. In your answers below, keep in mind the consumers' and firms' optimal decisions that give rise to the model and explain how and why agents' decisions change. (a) (9 marks) In 2050. advanced Artificial Intelligence technology is widely used in all companies. There is a sudden and sharp decline in all companies productivity. Robots decided we cannot run companies using INTERNET. There is a decline in A and At\". Analyze the effect on output, prices. wage. employment. consumption and investment. Clearly explain how and why agents' decisions change. Keep in mind consumers' and firms' optimal decisions that give rise to the ADAD model. (b) (8 marks) There is uncertainty about the prospects of the economy and a fraction of banks' depositors panic and withdraw their funds. This bank run decreases available credit and generates a large increase in spreads ft. What is the effect on macroeconomic aggregates and prices? (c) (8 marks) Suppose that with the objective of increasing GDP, you are asked to design the optimal policy response to the decline in productivity and the increase in spreads. Would you combine monetary and scal policy? Or would you only use one policy tool? How and why? Analyze the expected macroeconomic effects of your proposal. Convincing the Robots that we need INTERNET does not count as an