If, in a Given Country, There Is a Large Effect

question 46

Multiple Choice

If, in a given country, there is a large effect of the human capital of others on human capital accumulation by each individual, then

• A)the government should tax human capital transfers.
• B)the economy must be inefficient.
• C)there will be speedy convergence in incomes across the population.
• D)this is probably due to private education.
• E)incomes will never converge across the population.

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Definitions:

Economic Value

A measure of the benefit provided by a good or service to an economic agent.

Payments

Transfers of money, or other agreed-upon medium, from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Compounded Quarterly

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan on a quarterly basis.

Loan

A sum of money that is borrowed, usually from a financial institution or individual, which is expected to be paid back with interest.