What is Human and Physical Capital

What is Capital?

It is the amount of money invested into business

What are Different types of Capital

In Economics,it is of 2 types

Physical Capital

Human Capital

Lets understand this with the help of an example

Difference Between Human Capital and Physical Capital

What we will Study in this Chapter

We will study about only

Human Capital

What is Human Capital?

It is the skills and knowledge passed by a population which provides economic value of country

Important Points

Human Capital is Intangible

(It does not have any physical form, it is in the mind of owner)

Human Capital is not sold in market

(Only services of human capital are sold)

Human Capital benefits not only person but also the society

(An educated person maintains good health and hygiene and takes part in democratic process of country)

Human Capital is not completely mobile

(It is because movement of people is restricted)

Human Capital also depreciates with time

(Depreciation takes place by ageing of a person but can be reduced by keeping person updated)

Note

The 7th five year recognised the importance of Human Capital

MCQ Other Books

Question 1

In the following questions, select the correct answers:

____ five year plan recognised the importance of Human Capital.

1. Seventh
2. Third
3. Eigth
4. Sixth

Question 2

Which of the following is an example of physical capital?

1. Machinery
2. Health of People
3. Building
4. Education and knowledge of people

Question 3

____ refers to the stock of skill, ability, expertise, education and knowledge embodied in the people

1. Human resource
2. Physical Capital
3. Human Capital
4. None of these

Question 1

Active factor in production is:

1. Physical Capital
2. Human Capital
3. Both (A) and (B)
4. None of the above

Question 2

In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R).

Assertion (A): Physical capital helps in formation of human capital.

Reason (R): Physical capital is passive in nature.

Mark the correct choice:

1. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
3. Assertion (A) is true, but Reason (R) is false.
4. Assertion (A) is false, but Reason (R) is true.