Question

1. A computer is an example of human capital. T/F

2. Human capital refers to the physical tools and equipment that workers use on their jobs to enhance their productivity. T/F

3. Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages. T/F

4. The poverty rate is the percentage of the population whose family income falls below the poverty line. T/F

5. The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty. T/F

6. The economic life cycle describes how young people usually have higher savings rates than middle-aged people. T/F

Answer 1

1) Human capital is a unique form of capital which included habits, knowledge, experience, and personality attributes that helps to produce labor of economic value. A computer helps to increase productivity, but it is physical capital. The given statement is false.

2) Physical tools and equipment that helps to increase productivity fall under physical capital. Therefore, the given statement is false.

3) Given the same amount of physical capital to work with, the marginal productivity of workers differs based on the quality of human capital. Therefore, human capital plays an important role in determining wages. However, since they cannot account for high variations, there must be some s\\tochastic factors associated with wage determination. therefore, the given statement is true.

4) The given statement is true.

5) The poverty rate is not set for each family and it is not an absolute measure. therefore, the given statement is false.

6) There is no evidence or trend which shows young people have higher savings than the middle-aged people. The converse is more likely to be true. The economic life cycle simply explains the economic fluctuations. therefore, the given statement is false.