Which of the following statements is true of human capital?

• A. Human capital refers to the skills, knowledge, and experience possessed by individuals that can be used to produce economic value.
• B. Human capital is unrelated to productivity in the economy.
• C. Human capital consists only of physical assets such as machinery and buildings.
• D. Human capital cannot be increased through education or training.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of human capital. Human capital refers to the attributes that individuals possess, such as skills, knowledge, and experience, which contribute to their ability to produce economic value.
2. Step 2: Recognize that human capital is different from physical capital. Physical capital includes tangible assets like machinery and buildings, whereas human capital is intangible and related to people.
3. Step 3: Consider the relationship between human capital and productivity. Human capital directly affects productivity because more skilled and knowledgeable workers can produce more or higher-quality goods and services.
4. Step 4: Evaluate how human capital can be increased. Education, training, and experience are key ways to enhance human capital, improving an individual's economic value.
5. Step 5: Use these clarifications to identify the true statement: human capital is about skills, knowledge, and experience that contribute to economic value, and it can be increased through education and training.