Module Check: AI and the Economy
You have spent this module building a rigorous economic toolkit for understanding AI's effects on the world. Before you move on, this lesson tests and consolidates that toolkit — reviewing key terms, probing your understanding with questions that span the whole module, and then asking you to synthesize everything into a coherent argument. This is the check: can you think like an economist about AI?
Flashcards — click each card to reveal the answer
Module Quizzes
An AI system dramatically reduces the cost of drug discovery by identifying promising candidates faster and more cheaply than traditional lab processes. Which economic channel does this most directly represent?
A journalist writes: 'AI is eliminating jobs at an unprecedented rate — eventually there will be no work left for humans.' An economist responds that this concern, while serious, conflates two different dynamics. Which two dynamics is the economist distinguishing?
A country with a large call-center industry employing 800,000 workers faces the risk that AI customer service agents could replace most of that work. Which combination of factors would make this displacement most economically damaging for that country?
An AI model is trained on data produced by human workers, improves its performance with more data, and the company that owns the model charges other businesses to access it via API. Which economic property of AI does this describe, and what market structure does it tend to produce?
A senior software engineer at a large tech company says: 'AI coding assistants have made me much more productive — I can now write code three times as fast. This is great for me.' An economist might point out a second-order effect this engineer is not considering. What is it?
A government is designing a policy response to AI-driven displacement and is choosing between (A) a universal basic income funded by a wealth tax on AI company shareholders, and (B) a targeted reskilling program connected to employer commitments, funded by an automation tax. Which consideration most strongly favors option B over option A?
Synthesis Activity
The Economic Case: Argue Both Sides, Then Stake Your Own Position
- This final activity requires you to use the full economic toolkit from this module to construct rigorous arguments — and then to stake your own defended position.
- THE QUESTION: A city government is debating whether to actively recruit AI companies to establish headquarters and data centers in the city, with a package of tax incentives and infrastructure investment. Proponents say this will generate growth, jobs, and tax revenue. Opponents say it will widen inequality, displace existing workers, and primarily benefit out-of-state shareholders.
- PART A — THE ECONOMIC CASE FOR (8-10 sentences)
- Using at least four specific economic mechanisms from this module, construct the strongest possible economic case FOR the city attracting AI companies. You must address: productivity/growth effects, job creation dynamics, and what conditions would need to be true for the optimistic case to hold. Name real-world examples where applicable.
- PART B — THE ECONOMIC CASE AGAINST (8-10 sentences)
- Using at least four specific economic mechanisms from this module, construct the strongest possible economic case AGAINST the incentive package. Address: inequality and factor-share concerns, local labor-market displacement risks, geographic concentration dynamics, and what the historical record on tech-hub development says about distributional outcomes.
- PART C — YOUR POSITION (1 structured paragraph)
- Having argued both sides rigorously: what is your actual recommendation to the city government? You must: (1) state a clear recommendation, (2) identify which economic argument you find most decisive, (3) name one assumption your recommendation depends on that could prove wrong, and (4) propose one specific condition you would attach to any incentive package to protect against the strongest risk on the opposing side.
- Share Part C with a partner who argued the opposite position. Discuss: where does the disagreement ultimately come from — different empirical assumptions, different values, or both?