Question

What is the purpose of spending on information as a source of human capital?

Options

• It reduces the depreciation of physical capital

• It raises the supply of capital goods in the economy

• It enables people to make better investment decisions

• It makes human capital separable from its owner

Answer 1

Money spent on acquiring information about labour, education, and health markets is an investment because it enables people to take better decisions about where and how to invest in themselves. Better information leads to better human capital formation.