The World Economic Forum (WEF) made economic headlines with a report it published in late 2020. In the report, they predicted that 85 million jobs in the manufacturing sector worldwide would be lost to robots. Should this prediction materialise, the economy, as we know it, will no longer be the same. Required: 1. Considering the shock above, explain clearly how Aggregate Demand, Short-run Aggregate Supply and Long-run Aggregate Supply will be affected 2. Draw an appropriate AD - AS graph to demonstrate the economic impacts of the shock above. Assume that the economy starts at the long-run equilibrium. 3. Explain clearly in words how the key macroeconomic variables (average price level, inflation rate, Real GDP and unemployment rate) will be affected by the shock above 4. What should economic policy makers do with the people who are made redundant as their jobs get taken over by robots? In what way can the government support these people?

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Impact of Robots on Macroeconomic Variables The widespread adoption of robots in the manufacturing sector as predicted by the WEF will have significant economic consequences Lets analyze how it will a... View the full answer