Indian Economic Development: Human Capital Formation in India · Class 12 · CBSE · Commerce Economics
Which statement best explains why expenditure on education is considered an investment in human capital?
Practice question from Indian Economic Development: Human Capital Formation in India (Class 12 · CBSE · Commerce Economics), with the correct answer and a step-by-step solution.
easy · MCQ · Q-E1E9C5
Which statement best explains why expenditure on education is considered an investment in human capital?
- A.It increases the stock of machines and buildings in an economy.
- B.It improves a person's knowledge and skills, thereby raising productivity and earning capacity.Correct answer
- C.It permanently eliminates the scarcity of all economic resources.
- D.It transfers ownership of natural resources from the government to households.
Solution
Education develops knowledge and skills, which improve the productivity and earning capacity of individuals. Therefore, expenditure on education is treated as investment in human capital.
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