Case/source based MCQs Questions of Human Capital Formation Class 12

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Looking for Case/source based MCQs (Multiple Choice Questions) with answers of Human Capital formation of Indian Economic Development book of Class 12 CBSE, ISC, and other State Boards.

We have compiled very important Case and source based MCQs questions with answers of the Human capital formation chapter of economics class 12

Case/Source based Multiple Choice Questions of Human Capital Formation chapter of Economics Class 12

Let’s Practice

1. Read the following case study carefully and answer the questions that follow.

Human capital can be defined as the body of knowledge possessed by the population and the capacity of the population to use the knowledge effectively. Until the late 1950s, no economist and any other social scientist did pay much attention to the role of investment in human beings as an important determinant of economic development. The birth of this idea can be dated from the presidential address of Prof. Theodore W. Schultze to the American Economic Association in December 1960. As a result, the concept of human capital formation came to the limelight. A circular relationship between human development and economic growth has come to be established. Economic growth creates conditions for better health and education facilities; which in turn spur economic growth.

Human Capital Formation came into existence in _

a) 1950
b) 1960
c) 1970
d) 1980

Ans – b)

Economists say that the main key player of economic development is __

a) Human capital
b) Physical Capital
c) Real Capital
d) None of these

Ans – a)

In _ Five year Plan, India emphasized on human capital formation.

a) 2nd
b) 3rd
c) 5th
d) 7th

Ans – c)

________ means an improvement in the quality of life and living standards, e.g.,
measures of literacy, life expectancy, and health care.

a) Economic growth
b) Economic development
c) Investment
d) None of these

Ans – b)

2. Read the given case study and answer the questions 40 to 44.

Both forms of capital formation are the outcomes of conscious investment decisions. The decision regarding investment in physical capital is taken on the basis of one’s knowledge in this regard. The entrepreneur possesses the knowledge to calculate the expected rates of return to a range of investments and then rationally decides which one of the investments should be made. The ownership of physical capital is the outcome of the conscious decision of the owner the physical capital formation is mainly an economic and technical process.

Human capital formation takes place in one’s life when she/he is unable to decide whether it would maximize her/his earnings. Children are given different types of school education and health care facilities by their parents and society. Moreover, the human capital formation at this stage is dependent upon the already formed human capital at the school level. Human capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.

i) Which of the following does not correctly differentiate between the physical and human capital?

a) Human capital is intangible whereas physical capital is tangible.
b) Human capital can cope up with the changing technology whereas physcical capital
can not.
c) Human capital generates both personal and societal benefits whereas physical capital
generates only personal benefit.
d) Human capital gets obsolete with time whereas physcial capital does not.

Ans – d)

ii) In the context of the paragraph, it can be argued that human capital depreciates faster
than the physical capital. The given statement is:

a) True
b) False
c) Partially true
d) Can’t comment due to lack of proper estimation mechenism

Ans – b)

iii). Machines and industrial tools are examples of _

a) Physical capital
b) Human capital
c) Both physical and human capital
d) Natural capital

Ans – a)

iv) Investment in education by parents is the same as_______

a) Investment in intermediate goods by companies
b) Investment in CSR activity by companies
c) Investment in capital goods by companies
d) None of the above

Ans – c)

3. Read the following case study carefully and answer the questions that follows:

People spend to acquire information relating to the labour market and other markets like education and health. This information is necessary to make decisions w.r.t investment in human capital and its efficient utilisation. Thus, expenditure incurred for acquiring information relating to the labour market and other markets is also a source of human capital formation.

Which of the following is the source of human capital formation in India?

a) Health
b) Migration
c) Acquiring information
d) All of these

Ans – d)

Education provides

a) Private benefit
b) Social benefit
c) Both a) and b)
d) None of these

Ans – c)

__ persons contribute more to the growth of an economy.

a) Educated
b) Healthy
c) Both a) and b)
d) None of these

Ans – c)

Training given by a company to its employees is generally__________

a) investment
b) Social wastage
c) Both a) and b)
d) None of these

Ans – a)

4. Read the given case study and answer the questions

Traditional economic theory viewed capital in physical terms only. Economists during the late 1950s based on the aggregate production function found that the standard measures of simple labour and physical capital were incapable of explaining adequately the rapid post-war growth. Speculations on what was missing were diverse. Some argued that the principal explanation lays in the lack of appropriate adjustments for improvement in the quality of physical capital and the embodiment of technical progress in that capital. Others suggested that the most important omission pertains to the organisational advance or a vaguely specified human capital. The residual of unexplained growth was at first ascribed to technology by Solow, but later, the residual was defined to include improvements in the quality of capital can the investment in human beings. Human capital is formed with improvement in skills education. Improved health and education is merit as well as a public good and is associated with a large number of externalities which are often indirect, indivisible and non-quantifiable.

Which of the following gives the definition of public goods?

a) Excludable and non rivalrous in nature
b) Non-excludable and non-rivalrous in nature
c) Non-excludable and rivalrous in nature
d) Excludable and rivalrous in nature

Ans – b)

Consider the situation of 2 countries – A and B. Country A has invested more towards the
technological progress whereas Country B has invested more towards expanding its military
network and arms. To Solow, which country would go faster?

a) Country A
b) Country B
c) Both grows and the same pace
d) Can’t comment

Ans – a)

Standard economic theories failed to explain the post war rapid growth due to

a) Measuring growth in terms of physical inputs only
b) Ignoring other important factors such as improved skills and education
c) Both a) and b)
d) None of the above

Ans – c)

An externality is the good or bad impact which enters the utility or production function
of another individual or firm with no choice of their own. The given statement is

a) True
b) False
c) Partially True
d) Partially False

Ans – a)

In the context of the above paragraph, the ‘residual’ factor include.

a) Improvement in the quality of human capital
b) Investment in human beings
c) Improvement in technology
d) All of the above

Ans – d)

5. Read the following case study carefully and answer the questions that follow.

Human capital, intangible collective resources possessed by individuals and groups within a given population. these resources include all the knowledge, talents, skills, abilities, experience, intelligence, training, judgment, and wisdom possessed individually and collectively, the cumulative total of which represents a form of wealth available to nations and organizations to accomplish their goals. The concept of human capital stems from the economic model of human resource capitalism, which emphasizes the relationship between improved productivity or performance and the need for continuous and long-term investments in the development of human resources. Investments in human capital are viewed as affecting national and global economic performance or, more narrowly, where investments in people are viewed as crucial to organization performance. For an organization, this model suggests that high productivity and performance depend on developing learning systems that reflect the commitment of an organization to its human resources. As a result, ongoing investments in training, skill development, and job enrichment engender a reciprocal commitment among members to organizational goals and objectives.

The stock of skill and expertise of a nation at a point of time is called _ Capital.

a) Real
b) Physical
c) Human
d) None of these

Ans – c)

Which of the following is not a source of Human Capital Formation?

a) Education
b) Saving
c) Health
d) Information

Ans – b)

_ is based on the idea that education and health are integral to human well-being.

a) Economic Development
b) HUman Development
c) Social Growth
d) None of these

Ans – b)

__________ is/are the reason for rural-urban migration in India.

a) Unemployment
b) Health facilities
c) Money
d) All of these

Ans – a)

6. Read the given case study and answer questions 50 to 54.

The economic and social benefits of human capital formation and human development are well known. The union and state governments in India have been earmarking substantial financial outlays for the development of education and health sectors. The spread of education and health services across different sectors of society should be ensured so as to simultaneously attain economic growth and equity. India has a rich stock of scientific and technical manpower in the world. The need of the hour is to better it qualitatively and provide such conditions so that they are utilized in our own country.

For a improved health status of the country, family planning is quit essential. Which
of the following is the main reason for family planning?

a) for birth control issues
b) For having unwanted pregnancies
c) For having child every year
d) To get pregnant before the age of twenty

Ans – a)

What percentage of GDP is contributed towards health and educatoin sectors in India respectivley.

a) 1.8% and 4.6% respecively
b) 5.4% and 3.4% respectively
c) 7% and 7.4% respectively
d) 6% and 6.4% respectively

Ans – a)

__ is not an indicator which measures the education status of the country?

a) year os schooling
b) Life expectancy
c) Teacher pupil ratio
d) Net attendance ratio

Ans – b)

Health status of a country is relfected by indicators such as birth rate, death rate, infant
mortality rate, maternal mortality rate, life expectancy etc. The given statement is

a) True
b) False
c) Partially true
d) Can’t comment

Ans – a)

7. Read the following case study carefully and answer the questions that follow.

India realized the significance of human capital in financial development in its early stages. The Seventh Five Year Plan says, ‘Human Resource improvement has essentially to be appointed a key part in any development technique, especially in a nation with such a grand population. The reason for this action plan being:

Higher Productivity of Physical Capital: Human capital boosts the productivity of physical capital as skillful and professional operatives can understand and function the machines or guidelines efficiently than untrained operatives. Human Capital encourages the advancement of new techniques for production and this results in the increase of economic development in the shape of an increase in GDP.

In which five year plan, India realised the importance of Human capital?

a) Sixth
b) Seventh
c) Eighth
d) Ninth

Ans – b)

Human capital formation is very important especially for the nations which have ________.
population.

a) Small
b) Very Small
c) Large
d) None of these

Ans – c)

Human capital leads to an increase in ______________ .

a) Quality of life
b) Standard of living
c) Both a) and b)
d) None of these

Ans – c)

8. Read the following case study carefully and answer the questions that follow.

The concept of human capital has relatively more importance in labour surplus countries. The surplus-labour in these countries is the human resource available in more abundance than the tangible capital resource. The problem of scarcity of tangible capital in the labour surplus countries can be resolved by accelerating the rate of human capital formation with both private and public investment in the education and health sectors of their national economies. The statistical indicator of estimating human development in each nation is Human Development Index (HDI). It is the combination of the “Life Expectancy Index”, “Education Index” and “Income Index”. Human capital is the backbone of human development and economic development in every nation.

In which countries concept of human capital is more important?

a) Labour surplus countries
b) Capital surplus countries
c) Both a) and b)
d) None of these

Ans – a)

Which of the following statement is correct?

a) Human capital increase labour productivity, human development helps in making better
choice in future.
b) Human capital helps in making a better choice in future, human development enhances labour productivity.
c) Human capital formation in end in itself, human development is a mean to an end that is increasing in labour productivity.
d) None of these

Ans – a)

Which of the following is not the part of human development index?

a) Literacy
b) Liberty
c) Health
d) Income

Ans – b)

9. Read the following news report and answer the questions on the basis of the same:

New Delhi: Prime Minister Narendra Modi on saturday launched the Aushman Bharat Scheme via video conferencing to extend health insurance coverage to all residents of Jammu and Kashmir. The Prime Minister’s offie said the scheme will ensure universal health coverage, and focus on providing financial risk protection and ensuring quality and affordable essential health services to all individuals and communities.

Union Home Minister Amit Shah and the Union Territory’s Lieutenant Governor, Manoj Sinha, also spoke on the occassion.

The scheme will provide free of cost insurance cover to all residents of the UT of Jammu and Kashmir, the PMO said, adding that it will extend financial cover of upto ₹ 5 lakhs per family on a floater basis to all residents of the UT.

There is provision for operational extension of the ‘Pradhan Mantri Jan Arogya Yojana’ (PM – Jay) to approximately 15 lakh additional families, the PMO statement said, adding that the scheme will operate on insurance mode in convergence with PM-Jay.

The benefits of the scheme will be portable across the country. The hospitals empanelled under the PM-Jay scheme provide services under this scheme as well, the PMO said.

i) What does the Ayushman Bharat Scheme provide?

a) Better health care facility
b) Cheaper health care facility
c) Health Insurance
d) All of the above

Ans – c)
Explanation:- Ayushman Bharat Pradhan Mantri Jan Arogya Yojana of the Government of India is a national health insurance scheme of the state that aims to provide free access to healthcare for low income earners in the country.

ii) What is the main benefit of the scheme?

a) Bring a lot of people in the purview of health care.
b) Make health care affordable for the rich in India.
c) Alleviating poverty in India
d) Improving the education in India

Ans – a)
Explanation:- The scheme is launched to insure universal health converage, and focus on providing financial risk protection and ensuring quality and affordable essential health services
to all individuals and communities.

iii) The financial cover under the scheme is of _ per family

a) ₹ 5 lakh
b) ₹ 15 lakh
c) ₹ 10 lakh
d) ₹ 20 lakh

Ans – a)

iv) __________ is the other name of the scheme.

a) PM – Jay
b) PM – JAI
c) PM – AJAY
d) None of the above

Ans – a)
Explanation: The scheme will operate on insurance mode in convergence with PM-JAY.

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