MULTIPLE-CHOICE QUESTIONS
1. Human capital investment consists of:
a. any activity that enhances the quality of labor
b. expenditures for formal schooling only
c. expenditures for on-the-job training only
d. any activity that leads to the substitution of physical capital for labor
2. “Expenditures on education and training can be treated as investment in human capital.” This statement is:
a. true—current expenses are incurred with the expectation they will be more than compensated for by greater future returns
b. true—education must be financed by borrowing money
c. false—the market for college loans is too imperfect to be consistent with investment models d. false—education is purchased for its current (consumption) value, not its future
(investment) value
3. Approximately what percentage of the U.S. population had completed four or more years of college by the year 2006?
a. 8% b. 14% c. 29% d. 41%
4. Age-earnings data show that:
a. differences in earnings by education level disappear for workers age 55 and over
b. men’s earnings increase with educational level but not women’s earnings
c. earnings rise with factors such as family background and personal drive, but not education level
d. higher educational levels are consistently associated with higher earnings
5. Available evidence indicates that:
a. age-earnings profiles vary with education, but not with age
b. age-earnings profiles vary with age, but not with education
c. age-earnings profiles of workers with more education tend to be flatter, but higher, than those with less education
d. differences in earnings between workers who have more education and those who have less education generally widen with age
6. The total economic cost of formal education typically does not include:
a. expenditures for tuition, books, and fees
b. earnings foregone by choosing not to enter the labor