Answer to Question #248212 in Macroeconomics for Mehwash Sk

Question

1. Robots are introduced to do most basic assembly-line tasks.
a. Real wage and employment decrease
b. Real wage and employment increase
c. Real wage increase and employment decrease
d. Real wage decrease and employment increase

Answer 1

Solution:

The correct answer is c. Real wage increase and employment decrease.

Introduction of Robots increases quality and efficiency in production, including increasing the risk premium. Robots leads to an increase in labor productivity and ultimately an increase in real wages.

At the same time, due to the efficiency of Robots, industries will no longer need many employees and most of them will be replaced by Robots. Therefore, employment will decrease.