Quiz on Physical versus Human Capital

What is human capital?

• The set of skills of the workers in the economy

• The total population of a country

• The amount of money saved by a country

• The physical tools used in production

What does the production function with human capital depend on?

• The weather conditions

• The saving rate and spending on education

• The number of factories

• The population size

What is the current consensus about saving and education spending?

• They only affect physical capital

• They always lead to higher growth rates

• They do not lead to permanently higher growth rates

• They are not important for growth

How much of GDP does the US spend on education?

• 20%

• 15%

• 10%

• 6.5%

What is one reason why education spending may be overestimated?

• Education is only for investment

• Education is partly consumption

• All education is free

• Education has no costs

What is missing from the calculated figure of education spending?

• The number of students

• The quality of education

• The opportunity cost of wages forgone

• The number of teachers

What type of training is not included in the education figure?

• Seminars

• Workshops

• On-the-job training

• Online courses

What should be included in the actual and opportunity costs of training?

• Only formal education costs

• Costs of on-the-job training

• Costs of textbooks

• Costs of transportation

What is likely to be higher, physical capital depreciation or human capital depreciation?

• Human capital depreciation

• Neither depreciates

• They are the same

• Physical capital depreciation

How does human capital deteriorate over time?

• It does not deteriorate at all

• It deteriorates less the more it is used

• It deteriorates quickly

• It deteriorates faster than physical capital