Subject- Economics
CH: Human Capital Formation
Practice Paper 1 (Assertion and Reason)
1. Assertion (A): Expenditure on migration is a source of human capital
formation.
Reason (R): Migration to other countries involves the cost from one place to another
and the higher cost of living in the migrated places.
2. Assertion (A): The facilities for the formation of human capital have remained
adequate.
Reason (R): The resources allocated to human capital formation have been much less
than the resources required.
3. Assertion (A): The spread of education is necessary to control the population
growth rate.
Reason (R): Human Capital Formation decreases the quality of life.
4. Assertion (A): Education contributes to economic growth.
Reason (R): Education confers higher earning capacity on people.
5. Assertion (A): Both education and health increase the income-generating
capacity of an individual.
Reason (R): The contribution of an educated and healthy person to economic growth
is more than that of an illiterate and unhealthy person.
6. Assertion (A): On-the-job training is a source of human capital formation.
Reason (R): on-the-job training is a programme where employees skills are horn by
technical and educational training.
7. Assertion (A): Human Capital Formation is required for the effective use of
physical capital.
Reason (R): The formation of human capital raises the life expectancy of the people.
8. Assertion (A): Human Capital Formation is a stock concept.
Reason (R): Stock refers to the variables which are measured at a particular point of
time.
9. Assertion (A): Human Capital Formation is an important determinant of
economic growth of a nation.
Reason (R): Human Capital Formation Leads to better utilization of resources which
enhances their skills and productivity.
10. Assertion (A): Expenditure on education and health are key determinants of
human capital formation.
Reason (R): Human Capital Formation is an ongoing and continuous process.
11. Assertion (A): There is a need to bridge the skill gap in India in order to
enhance human capital and bring about more productive labour force.
Reason (R): Skills are tangible in nature and can be separated from their owner.
12. Assertion (A): High level of human capital implies not only high earning
potential but also a change in the social and economic outlook.
Reason (R): It transforms the way of thinking and allows an individual to make well-
informed and rational decisions.
13. Assertion (A): People migrate that can fetch them high earning jobs than what
they get in their native places/countries.
Reason (R): Enhanced earnings in the new place exceeds the cost of migration.
14. Assertion (A): Education is a wider concept and encompasses literacy.
Reason (R): A person is considered literate if he has the ability to read and write in
any language. A person is educated if he can find a job and can earn some income.
15. Assertion (A): The literacy rate in India has increased but so has the absolute
number of illiterates.
Reason (R): Literacy rates have increased mainly becasue of the growth in educational
facilities. However, the absolute number of illiterates has increased because of the
tremendous increase in population.
16. Assertion (A): An educated woman can make well-informed decisions and can
reduce the rate of growth of the population.
Reason (R): It favourably affects the fertility rate as educated women do not wish to
expand the size of their families unnecessarily.
17. Assertion (A): Physical capital helps in the formation of human capital
Reason (R): Physical capital is passive in nature
18. Assertion (A): Human capital formation gives birth to innovation, invention
and technological improvements.
Reason (R): Investments in education creates the ability to adopt newer technologies,
facilities invention, and innovation since an educated workforce generally adapts to
modern technologies and innovation.
19. Assertion (A): Physical capital helps in the formation of human capital.
Reason (R): Human capital helps in the formation of physical capital as physical capital
is passive in nature.
20. Assertion (A): Literacy reates in India have increased but so has the absolute
number of illiterates.
Reason (R): Literacy rates in India have increased mainly because of the growth of
educational facilities which have not matched the growth of population leading to the
increased absolute number of illiterates.
21. Assertion (A): Components of human capital and human development are
complementary to each other.
Reason (R): Expenditure on components of human capital leads to human
development.
Practice Paper 2
MCQ
1. Which of the following statements is true about human capital?
a. Human resource and human capital are related to each other
b. Human development and human capital are related to each other
c. Both a and b are correct
d. Both a and b are incorrect
2. Which of the following statements is true about the importance of
education?
a. Education is important because it helps to expand the mental horizon of
an individual
b. Education is important because it helps to develop the human
personality
c. Education is important because it helps in the cause of economic
development of the nation
d. All of the above
3. Which of the following statements is not a merit of human capital formation?
a. Human capital formation plays an important role in improving technical
knowledge
b. Human capital formation helps to expand the size of businesses
c. Human capital formation is important for the purpose of changing
social outlooks
d. Human capital formation leads to an increase in the overall cost of
production
4. Which of the following statements is not true about the education levels?
a. Years of schooling is an indicator of the education level of an individual
b. Teacher pupil ratio is an indicator of the education level of an individual
c. Enrollment rate is an indicator of the education level of an individual
d. Life expectancy is an indicator of the education level of an individual
5. Which of the following statements about education expenditure is accurate?
a. Elementary levels take up the major share of total educational
expenditure in India
b. Tertiary levels take up the major share of total educational expenditure
in India
c. Secondary levels take up the major share of total educational
expenditure in India
d. Higher levels take up the major share of total educational expenditure in
India
6. Which of the following is correct about human resource?
a. A person is a human resource if he/she is willing to work
b. A person is a human resource if he/she is able to work
c. A person is a human resource if he/she is from a particular age group
d. All of the above
7. The expenditure on education by the Indian government _______.
a. Is expressed as a percentage of the gross domestic product (GDP)
b. Is expressed as a percentage of the total government expenditure
c. Both a and b are correct
d. Both a and b are incorrect
8. Which of the following is a major source of human capital formation in India?
a. Expenditure on on-the-job training
b. Expenditure on education
c. Both a and b are correct
d. Both a and b are incorrect
9. Which of the following statements about rural-urban migration is true?
a. Illiteracy is one of the main reasons for rural-urban migration in India
b. Inflation is one of the main reasons for rural-urban migration in India
c. Lack of infrastructure is one of the main reasons for rural-urban
migration in India
d. Unemployment is one of the main reasons for rural-urban migration in
India
10. Which of the following is an accurate definition of physical capital?
a. Physical capital refers to the total stock of the tangible inputs of
production like land and machinery
b. Physical capital refers to the process of increasing and acquiring skilled
people for the job
c. Physical capital refers to the share of a company
d. All of the above
11. Which of the following is the problem of human capital formation?
a. Rising population is one of the main problems of human capital
formation in India
b. Brain drain is one of the main problems of human capital formation in
India
c. Low academic standards are one of the main problems of human
capital formation in India
d. All of the above
12. Which of the following agencies is responsible for implementing the rules
and regulations for technical education?
a. Indian Council of Medical Research (ICMR)
b. All India Council of Technical Education (AICTE)
c. University Grants Commission (UGC)
d. National Council of Educational Research and Training (NCERT)
13. Which of the following is the meaning of people as a resource?
a. It means that people are the natural capital of a country based on their
existing skills
b. It means that people are the human capital of a country based on their
existing skills
c. It means that people are the technical capital of a country based on
their existing skills
d. It means that people are the overall capital of a country based on their
existing skills
14. Which of the following is not a source of transformation of human capital?
a. Expenditure for building factories and machines
b. Expenditure for migrating elsewhere looking for better employment
opportunities
c. Expenditure for training on the job to increase productivity
d. All of the above
15. Demographic dividend means ________.
a. The growth that can occur when a country’s population has a large
number of people in the working-age bracket
b. The growth that can occur when a country’s population has a large
number of people not in the working-age bracket
c. Both a and b are correct
d. Both a and b are incorrect
16. _____ refers to the ability of human to contribute to the process of value-addition in
the economy.
a) Human capital
b) Human Resource
c) Human capital formation
d) None of these
17. Both human capital and_____ are related to each other.
a) Human resource
b) Human development
c) Human being
d) All of these
18. _____ refers to the produced means of production.
a) Human capital
b) Human development
c) Physical capital
d) Both a and c
19. Addition to the stock of capital can be done by
a) Expenditure on Education
b) Expenditure on Health
c) Study Programme for adults
d) All of these
20. Which cost is involved in Migration?
a) Transportation cost
b) Higher Living cost in different place
c) Both a and b
d) None of these
21. ___ is a much wider concept than literacy.
a) Education
b) Health
c) Income
d) None of these
22. What is the desired level of public expenditure on education as per
Education Commission?
a) 7%
b) 10%
c) 6%
d) 8%
23. Problems in Human Capital Formation is
a) Low academic standards
b) Brain Drain
c) Rising population
d) All of these
24. Which organization enforces the rules and regulations regarding
technical education?
a) NCERT
b) AICTE
c) ICMR
d) UGC
25. Education is important because
a) Expands mental horizon
b) Develops human personality
c) Helps in economic development
d) All of these
26. Which five-year plan recognizes the importance of human capital?
a) Second
b) Fourth
c) Seventh
d) Eighth
27. Which sector is the back bone of Indian economy?
a) Primary
b) Secondary
c) Tertiary
d) All of these
28. Which institution is the primary funding authority for universities?
a) NCERT
b) AICTE
c) ICMR
d) UGC
29. Expenditure on health can be done in the form of : –
a) Preventive Medicine
b) Curative Medicine
c) Social Medicine
d) All of these
30. Which organization enforces the rules and regulations relating to
education and research in health?
a) NCERT
b) AICTE
c) ICMR
d) UGC
31. There is a growing trend towards ____ of education, which makes it
expensive for poor people.
a) Socialization
b) Privatization
c) Both a and b
d) None of these
32. The enrolment ratio of female students in schools is ____and their drop-
out ratio is____
a) High, Less
b) Less, High
c) Less, Less
d) None of these
33. ____ and _____ sector needs huge investment.
a) Education
b) Health
c) Both a and b
d) None of these
34. ____ capital is tangible and can be sold in the market.
a) Human
b) Physical
c) Service
d) None of these
35. _____ of human capital, refers to the ways of adding to the stock of
capital.
a) Sources
b) Determinants of physical capital
c) Both a and b
d) None of these
36. _____ on health makes human more efficient and productive.
a) Expenditure
b) Investment
c) Both a and b
d) None of these
37. Institutions providing elementary education have increased _____times.
a) Three
b) Two
c) Four
d) Five
38. India harbors the_____number of illiterates in the world.
a) Largest
b) Lowest
c) Average
d) None of these
39. Human development is ___ of human welfare.
a) A Parameter
b) An Index
c) An Attribute
d) None of these
40. Expenditure on health makes a person more efficient and productive.
a) True
b) False
41. ________ refers to man made means of production which are required
for further production. ( Fill in the blank with correct option)
a)Human Capital
b)Physical capital
c)Financial capital
d)None of the above
42. ________ creates public and private benefits. ( Fill in the blank with
correct alternative)
a)Human Capital
b)Physical capital
c)Both (a) and (b)
d)None of the above
43. _______ is a regulating authority of the education sector in India.
a)ICMR
b)Sarva Siksha abhiyan
c)Kendra Vidhalaya
d)University grants commission
44. Human capital considers _______as means to increase labour
productivity. ( Fill in the blank with correct alternative)
a) Education
b) Health
c) Migration
d) Both (a) and (b)
45. Human capital treats human being as_____(Fill in the blank with correct
alternative)
a) Separable elements
b) Intangible elements
c) Means to end
d) As ends
46. ________ is based on the idea that education and health are integral to
human beings. ( Fill in the blank with correct option)
a) Human capital
b) Human development
c) Human capital formation
d) None of the above
47. Read the following statement given below and choose the correct
alternative
Statement 1- Causality between human capital and economic growth
flows in either direction.
Statement 2- Only employed people have the right to get education and
lead a healthy life
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
48. Read the following statement given below and choose the correct
alternative
Statement 1- Education and health causes private benefits.
Statement 2- AICTE is the regulatory body for medical studies .
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
49. Read the following statement given below and choose the correct
alternative
Statement 1- Percentage of education expenditure of total government
expenditure indicates how much of people’s income is committed to
education in a country
Statement 2- Percentage of educational expenditure of GDP shows the
importance of education in the government’s scheme.
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
50. Read the following statement given below and choose the correct
alternative
Statement 1- Migration involves cost of transportation and high cost of
living
Statement 2- Education is the process of teaching, training and learning
to improve knowledge
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
51. Read the following statement given below and choose the correct
alternative
Statement 1- On the job training helps workers to acquire new
specialized skills
Statement 2- On the job training takes place in the firm itself
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
52. Read the following statement given below and choose the correct
alternative
Statement 1- The expenditure on education and health make short term
impact
Statement 2- The expenditure on education and health can be reversed
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
53. Read the following statement given below and choose the correct
alternative
Statement 1- In India , there is gender biases in offering education to all
Statement 2- After 1991 reforms, there has been growing tendency
towards privatisation of education
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
54. . Read the following statement given below and choose the correct
alternative
Assertion (A)- Education for all is still a distant dream in India
Reason (R )- Government withdraws its resources from the education
sector whenever it wants
a) Both assertion and reason are true. Reason is the correct explanation
of assertion
b) Both assertion and reason are true. Reason is not the correct
explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not
55. Read the following statement given below and choose the correct
alternative
Assertion (A)- The differences in literacy rate of males and females is
narrowing.
Reason (R )- Education for women needs to be promoted further more.
a) Both assertion and reason are true. Reason is the correct explanation
of assertion
b) Both assertion and reason are true. Reason is not the correct
explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not
56. Read the following statement given below and choose the correct
alternative
Assertion (A)- The Indian education pyramid is steep
Reason (R )- Lesser number of people reach the higher education level
a) Both assertion and reason are true. Reason is the correct explanation
of assertion
b) Both assertion and reason are true. Reason is not the correct
explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not.
57. Read the following statement given below and choose the correct
alternative
Assertion (A)- Physical capital is tangible and can easily be sold in the
market.
Reason (R )- Human capital is intangible
a) Both assertion and reason are true. Reason is the correct explanation
of assertion
b) Both assertion and reason are true. Reason is not the correct
explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but assertion is not
58. Read the text given below and answer the questions that follow .
India perceived the significance of human capital in economic growth
quite a while in the past. The Seventh Five Year Plan says, ‘HR
improvement has essentially to be relegated to a critical job in any
advancement procedure, especially in a country with an enormous
populace’.
The accompanying focuses show unmistakably the reliance among the
two
Higher Productivity of Physical Capital and Human capital builds
efficiency of actual capital as specific and gifted specialists can deal
with machines or procedures better than the incompetent works. This
expanded usefulness and subsequent creation prompts economic
growth.
Imaginative Skills : Human capital works with advancement of new
strategies for creation and this increments the pace of financial
development as expansion in GDP.
Higher Rate of Participation and Equality: Human capital arrangement
prompts a higher work rate. With expansion in work, the usefulness
rises. Likewise, expansion in work openings additionally expands the
degree of pay and this aids in lessening disparities of abundance.
Both, expansion in work rate and lessening in pay imbalances are
pointers of economic development
Brings Positive Outlook: The course of human resources arrangement
acquire an inspirational perspective to the general public which is not
the same as universal and customary perspectives, and consequently
builds the pace of support in the labor force causes expansion in degree
of creation
45. Read the following statement given below and choose the correct
alternative
Statement 1- Human capital formation brings positive outlook
Statement 2- Human capital formation ensures higher rate of participation
and equality
a) Both are correct
b) Both are incorrect
c) Statement 1 is correct and statement 2 is incorrect
d) Statement 1 is incorrect and statement 2 is correct
46. ________builds efficiency of actual capital ( Fill in the blank with
correct alternative)
a) Human capital
b) Physical capital
c) Both (a) and (b)
d) None of the above
47. Which of the following are pointers of economic development
a) Expansion in work rate
b) Decrease in pay imbalances
c) Human capital formation
d) Both (a) and (b)
48. ________incurs imaginative skills in a person.( Fill in the blank with
correct option)
a) Economic growth
b) Human capital
c) Physical capital
d) Human capital formation
49. Under which five year plan , importance was given to human capital
formation (choose the correct alternative)
a) Seventh
b) Sixth
c) Fifth
d) Fourth
Practice Paper 3
Theory
1. Define human Capital?
2. What are the two major sources of Human Capital in-country?
3. Explain the importance of Human capital formation?
4. Explain how the following can be the reasons for poor human capital
formation.
a. Insufficient Resources
b. High growth of population
c. High poverty levels
d. Lack of proper manpower planning
5. Distinguish between Human capital and physical capital?
6. Write the difference between human capital and Human Development?
7. What is Gross Environment Ratio (GER)?
8. Discuss the problems or weaknesses in the education sector?
9. Briefly explain primary education schemes?
10. What factors contribute to human capital formation?
11. Discuss the following as a source of human capital formation:
a. Health infrastructure
b. Expenditure on migration.
12. Examine the role of education in the economic development of a nation?
13. Argue in favour of the need for different forms of government intervention
in the education and health sectors?
