Answer the following:
1. Why is formal education called an investment in human capital? How is it like an investment in physical capital? Formal education is referred to as human capital because it is directly relevant to the quality of labor. “The average product of labor increases due to investment in human capital” (Sharp, Register, Grimes)
2. Productivity is important to capital and financial resources. Choose an example of each (one capital resource and one financial resource) and explain how productivity can be increased for each resource.
3. Why is the rate of economic growth especially important to the long-run process of economic growth?
Small differences in growth rate today translate into significant differences in the level of economic activity in the future because economic growth compounds yearly. When the growth rate is averaged over numerous years, we see that the size of the Gross Domestic Product greatly increases.
Use the web page below as needed:
https://novellaqalive2.mhhe.com/sites/dl/free/007000000x/216454/chap13.pdf