What is Human Capital?
- Part of the country’s current output and imports is not consumed or exported during the accounting period.
- Providing borrowers with a lump sum of cash upfront in exchange for specific borrowing terms.
- The financial worth of a laborer’s experience and abilities.
- None of the above.
Answer: c. The financial worth of a laborer’s experience and abilities
Answer Explanation
Correct answer is the financial worth of a laborer’s experience and abilities. It is the intangible asset that employees bring to the workplace that encompasses their talents, competencies, and knowledge acquired through their education and experience. With this capital, they are able to perform tasks efficiently, contribute to economic growth, and create value for themselves and their employers.
When individuals and societies allocate resources to education, training, and skill development, they expect returns in the form of higher wages, better job opportunities, and greater productivity in the future.
Why the other options are not correct
a. A part of the country’s current output and imports are not consumed or exported during the accounting period:
The description in Option A appears to refer to the concept of “Gross Domestic Product.” A country’s GDP is the total value of all goods and services produced within its borders during a given period, minus the value of imports. An economy’s economic output is commonly used as an indicator of its health. The problem with this option is that it does not accurately define human capital, which is specifically related to the skills and abilities of workers in the labor force, rather than the amount of exports or imports.
b. Providing borrowers with a lump sum of cash upfront in exchange for specific borrowing terms:
It seems to describe the concept of “Debt Financing” or a financial transaction where a lender provides a borrower with a lump sum of money upfront. Which the borrower agrees to repay with interest over time. As it deals with financial borrowing and lending, instead of evaluating the worth of a laborer’s skill and experience, this option does not relate to human capital.
d. None of the above
This option is incorrect because there is a correct answer.
Conclusion
A person’s human capital is the intangible assets he or she brings to the labor market. It includes education, skills, experience, and training. It is essential to the growth of society and individual success to invest in human capital through education and skill development. Option C, defines human capital correctly as the value of a laborer’s skills and experience. It acknowledges the importance of human resources in driving economic prosperity. The distinction between human capital and other economic concepts can help us better understand the complex nature of economics and the factors that affect it
In which Market debt and stocks are traded and maturity period is more than a year?