The general human capital model predicts that schooling increasesGroup of answer choicesas both ability and the discount rate decrease.as both ability and the discount rates increase.as ability decreases but as the discount rate increases.as ability increases but as the discount rate decreases.when ability is held constant and the discount rate increases.
Question
The general human capital model predicts that schooling increasesGroup of answer choicesas both ability and the discount rate decrease.as both ability and the discount rates increase.as ability decreases but as the discount rate increases.as ability increases but as the discount rate decreases.when ability is held constant and the discount rate increases.
Solution
The general human capital model predicts that schooling increases as ability increases but as the discount rate decreases.
Here's why:
-
Ability: The model assumes that individuals with higher ability gain more from education, as they are more capable of understanding and applying what they learn. Therefore, as ability increases, the return on investment in education (i.e., schooling) also increases.
-
Discount Rate: The discount rate refers to the rate at which future benefits are discounted to present value. A lower discount rate means that future benefits are valued more highly in the present. Since the benefits of education are realized over a long period of time in the future, a lower discount rate increases the present value of these benefits, making investment in education (i.e., schooling) more attractive. Therefore, as the discount rate decreases, schooling increases.
Similar Questions
According to the Becker/Rosen human capital model of educational choice, workers invest in education until: Group of answer choicesThe marginal utility from education is equal to zero.The marginal rate of return from education is equal to their discount rate.The percent increase in lifetime earnings from one more year of education is 0.The marginal rate of return from education becomes negativeThe marginal utility from education equals to the cost of education.
An increase in human capital will decrease output.Group of answer choicesTrueFalse
Which of the following is a prediction of human capital theory?Question 11Answera.The value of an individual's skills and abilities is a function of the time and expense required to acquire them.b.Higher wages improve efficiency by attracting workers who will perform better.c.Jobs with negative characteristics require higher pay to attract workers.d.Pay policies signal the kinds of behaviour an employer seeks from employees.e.Job seekers will not accept jobs when pay is below a certain wage.
An increase in human capitalGroup of answer choicesincreases the productivity of labor.decreases the productivity of labor.increases the productivity of labor only if there is a corresponding technological change.increases the capital-labor ratio.
Human capital increases with on-the-job training.Group of answer choicesTrueFalse
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.