ARMY PUBLIC SCHOOL NO.

1,JABALPUR
CLASS XII
ECONOMICS(030)
CHAPTER 4: HUMAN CAPITAL FORMATION

MULTIPLE CHOICE QUESTIONS

1. In Indian economy for the first time which five year plan considered Human Resources Development an
essential aspect for development strategy?

a) 3rd five year plan b) 5th five year plan c) 7th five year plan d) 10th five year plan

2 What does AICTE stand for?

a) All India Council for Technology Education b) All India Council for Technical Education

c) All India Commission for Technology Education d) All India Commission for Technical Education 3
Human capital is called an investment that brings:

a) Qualitative improvement in labour b) Quantitative improvement in labour

c) Both d) None

4 Human capital and Human Development are_____.

a) Opposite concepts b) Different concepts c) Related concepts d) Both means are same

5 ................ adversely affect the quality of human capital

a) High growth rate of population b) High growth rate of employment

c) Deficient manpower planning d) Both A and C

6 human capital refers to the stock of *

a) Wealth b) Assets c) Expertise d) All of above

7 People generally, do ........................... in search of jobs which give them higher salaries than that they may
get in their native places.

a) Invest b) Work c) Think d) Migrate

8 Health expenditure directly increases .................................. in the economy.

a) Amount of capital b) Certain amount of profit

c) Supply of healthy labour force d) Number of industries

9 Education is required for the people because it is capable of..............................

a) Conferring higher learning capacity on the people

b) Giving people a better social standing and pride

c) Enabling people to make better choices in life

d) Providing knowledge to understand the changes taking place in society.

10 Among these which state has the highest literacy rate in India:

a) Mizoram b) Kerala c) Himachal Pradesh d) Rajasthan

11 A person becomes a human resource when he or she: *

a) Is willing to work b) Is able to work c) Belong to a particular age group d) All the above

12 People at which age group are treated as productive labour force?

a) 15-35 b) 60-70 c) 15-60 d) 0-6

13 HDI index rates all countries on a scale *

a) 0 TO 5 b) 0 TO 10 c) 0 TO 1 d) 1 TO -1

14 When did NavodayaVidyalaya established in India on the concept of Model school?

a) !985-86 b) 1986-87 c) 1988-89 d) 1987-88

15 NarvodayaVidyalaya were established to give modern education of goods standard to talented students in

a) Urban area b) Rural area c) Only for Physically disabled students d) Both A and B

16 Individuals invest in education with the objective of:

(a) Increasing their future income (b) Accelerating the development process

(c) Facilitating adaptation of new technologies (d) All of these

17 The stock of skill, ability, expertise, education and knowledge in a nation at a point of time known as: (a)
Human development (b) Human resource (c) Human capital (d) None of these

18 Match and choose the correct combination.

(i) Preventive medicine (A) medical intervention during illness

(ii) Curative medicine (B) vaccination

(iii) Social medicine (C) the spread of health literacy

(a) (i) – (B); (ii) – (A); (iii) – (C)

(b) (i) – (A); (ii) – (B); (iii) – (C)

(c) (i) – (C); (ii) – (B); (iii) – (A)

(d) (i) – (B); (ii) – (C); (iii) – (A)

19 When was the Right to Education Act enacted?

(A) 2008 (B) 2009 (C) 2010 (D) 2012

20 The various organisations like NCERT,UGC,AICTE and CBSE in India come under which sector ?

(a) Health (b) Education (c) Energy (d) Banking

CASE STUDY BASED QUESTIONS

CASE STUDY -1

The first ever Human Development Report (2001) of India has been released. It focuses on the vital-facts
related to bureaucratic controls and poor governance of the country. The report was prepared by the
planning Commission under the guidance of its Deputy Chairman, Mr. K.C. Pant. This 297-page document
was released on April 23, 2002 and submitted to the Prime Minister. The report states that from 1983 to
1993-94, the Human Development Index (HDI) improved by nearly 2.6 per cent annum and by over 3 per
annum 73 KVS RO RAIPUR during the period 1993-2001. Rural and urban areas have shown signs of
improvement, according to the report. Kerala, Punjab, Tamil Nadu, Maharashtra and Haryana have good
HDIs. But states like Bihar, Uttar Pradesh, Mandhya Pradesh, Rajasthan and Orissa have HDIs close to
nearly one-half to that to Kerala. Funds must be distributed efficiently and effectively so that human
development processes do not suffer according to the report. India’s growth in terms of HDI has shown
dismal trends during the recent past. Lack of resources, communal feelings and illiteracy are the chief causes
of decay of the average Indian. Further, politicians, bureaucrats and other elements of the administration
exploit the masses, executives, and business houses. The economic and political systems need serious
transformations. The socio-cultural fabric of the nation cannot be weaved again because of religious
compulsions. Ironically, we believe in religion so that our passage into the next world could be smooth and
sans agonies. But we are least worried about our courses of action (and their outcomes) in this world.
Religion often forces us to dominate other communities and sects. We attack them at opportune moments
and face reprisals from them. This vicious cycle has been going on in India for the past 3,000 years.In order
to develop the quality of life of Indians, the administration must become honest, efficient, productive and
agile. Plant workers must increase productivity and eschew violence and strikes. Businessmen must conduct
their business operations with honesty; they never do so. Further,political parties must guide the electorate
and also, the masses towards prosperity and not chaos. Our psyche has to be changed; a change of
government cannot lead us to a new era sans corruption and poor governance. Economic growth is linked to
social growth, moral awareness, health and education. Every industrialist must work for the benefit of his or
her nation. We have least interest in our nation and that is why, we are not receiving anything from her.The
targeted rate of growth (of GDP) for the Tenth Plan is 8 per cent. However, the GDP growth rate during the
Ninth Plan was a meagre 5.4 per cent. During the Eighth Plan, this rate was 6.7 per cent. How can we ensure
consistent human development on a national scale if our results always fall short of targets. Our economy
should grow at the rate of 7-8 percent. During 2001-02, it grew at the rate of 5.4 per cent.

1. Which state is lag in good HDI according to this report ?

2. When was fist report on HRD was published?

3. What was the target for GDP Growth during 10th five year plan ?

4. Which is not related with human capital formation?

CASE STUDY 2

Read the passage carefully and answer the questions that follows The objectives of public finance are to
ensure macroeconomic stability, achieve the desired state of distribution, provide public services to
accelerate growth and development. Fiscal policy has both macro and microeconomic aspects. Further, the
objectives include allocating resources for the provision of public services. The important point is that
ensuring security and protection of property rights is a basic public good and this can be provided only by
the government. The governments have the task of distributing incomes and alleviating poverty. After the
Great Depression and influenced by Keynesian economics, public spending was assigned a central role.
Thus, the role of public finance is inextricably linked to the role of the state. From merely ensuring safety,
security and property rights, governments have expanded their activities to providing a variety of public
services with externalities. The expansion has been a subject matter of debate. Musgrave considers that the
expansion of the public sector has been a necessary and constructive development and strong public sector is
needed along with the capitalist market. In contrast, Buchanan argues that dispute arises when the
stateexpands to areas beyond the realm of boundaries of the protective state into a productive or tax-transfer
state.In India, state intervention through public finance policy has to play an important role besides ensuring
the safety and security 75 KVS RO RAIPUR of people and their property rights. These include the need to
overcome large social and physical infrastructure deficit, provide correctives to missing and imperfect
markets, introduce measures to reduce acute inequalities and poverty and provide correctives to widespread
information asymmetry. Interventions are needed also to provide externalities in terms of market
development, irrigation, storage and price support in agriculture to deal with market imperfections and
supply volatility. Similarly, generalized externalities have to be ensured for the manufacturing and service
sectors through competitive levels of infrastructure. India's public finance policies have enabled the
government to play a catalytic role in the development of the economy as a whole. In addition over the
years, there has been a significant increase in transfers from the government such as for employment
guarantee and food security, national housing scheme, Swachchh Bharat Abhiyan, Ujjawala Yojana,
Pradhan Mantri Kisan Samman Nidhi, periodic loan waives, etc.

1. Which one of the following statements is correct?

A. The expansion of the public sector has been a necessary and constructive development and a strong
public sector is needed along with the capitalist market

B. There are several reasons for the state to embrace a much larger role

C. In India, state intervention through public finance policy has to play an important role

D. Keynesian economics states that the state has to ensure full employment

Choose the correct answer from the options given below:

1. A and B only 2. A, B and C only

3. A and C only 4. A, B, C and D

2. The statement, "Dispute arises when the state expands to areas beyond the realm of boundaries of the
protective state into a productive or tax-transfer state", was given by

1. Musgrave 2. Keynes 3. Dalton 4. Bueltanan

3. Which one of the following objectives of public finance is NOT correct?

1. Ensure macroeconomic stability 2.Ensure reduction of adverse balance of payments

3. Accelerate growth and development 4. Desired state of distribution

4 The externalities of the government intervention in the economy can be found in terms of

A. Market development B. Money supply

C. Storage and price support in agriculture D. Irrigation

Choose the correct answer from the options given below:

1. C and D only 2. A, B and D only 3. A, B and C only 4. A and D only

5. Which one of the following does NOT fall in the category of government transfers?

1. National Housing 2. Swachchh Bharat Abhiyan 3. Periodic loan waivers 4. Education

ASSERTION REASON BASED QUESTIONS

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.

a. (A) is true, but (R) is false.

b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.

a. (A) is true, but (R) is false.

b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.

a. (A) is true, but (R) is false.

b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
4. Assertion (A): Education contributes to economic growth.
Reason (R): Education confers higher earning capacity on people.
a. (A) is true, but (R) is false.
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.
a. (A) is true, but (R) is false.
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.
a. (A) is true, but (R) is false.
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.
a. (A) is true, but (R) is false.
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.
a. (A) is true, but (R) is false.
b. (A) is false, but (R) is true
c. Both (A) and (R) are true and (R) is the correct explanation of (A)
d. Both (A) and (R) are and (R) is not the correct explanation of (A) .
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.

STATEMENT BASED QUESTIONS

Choose the correct alternative:

a. Both the statements are true.

b. Both the statements are false.
c. Statement 1 is true and statement 2 is false.
d. Statement 1 is false and statement 2 is true

1. STATEMENT 1: There is a need to bridge the skill gap in India in order to enhance human capital and
bring about more productive labour force.

STATEMENT 2: Skills are tangible in nature and can be separated from their owner.

2. Statement 1: High level of human capital implies not only high earning potential but also a change in the
social and economic outlook.
Statement 2: It transforms the way of thinking and allows an individual to make well-informed and rational
decisions.

3. Statement 1: People migrate that can fetch them high earning jobs than what they get in their native
places/countries.
Statement 2: Enhanced earnings in the new place exceeds the cost of migration.

4. Statement 1: Education is a wider concept and encompasses literacy.

Statement 2. 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.

5. Statement 1: The literacy rate in India has increased but so has the absolute number of illiterates.
Statement 2: 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.

6. Statement 1: An educated woman can make well-informed decisions and can reduce the rate of growth of
the population.
 Statement 2: It favourably affects the fertility rate as educated women do not wish to expand the size of
their families unnecessarily.

7. Statement 1: Physical capital helps in the formation of human capital

Statement 2: Physical capital is passive in nature

8. Statement 1: Human capital formation gives birth to innovation, invention and technological
improvements.
Statement 2: 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.
9. Statement 1: Physical capital helps in the formation of human capital.
Statement 2: Human capital helps in the formation of physical capital as physical capital is passive in
nature.
10. Statement 1: Literacy reates in India have increased but so has the absolute number of illiterates.
Statement 2: 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.

IMAGE BASED QUESTIONS

1. How human capital formation causes innovations, and invention ?

2.

On the basis of above given data Compare and analyse the literacy rate.
3.

Interpret the given picture as indicating the source of human capital formation as depicted above.

VERY SHORT ANSWER TYPE QUESTIONS

1. Define Human Capital.

2. Define Physical Capital.

3. What is ‘On the Job Training’?

4. What is Right to Education?

5. What are the possible sources of Human Capital formation?